1. Short Answer Questions: (a) Why can we think of open market operations as money creation? (b) What is the difference between borrowed and non-borrowed
1. Short Answer Questions: (a) Why can we think of open market operations as money creation? (b) What is the difference between borrowed and non-borrowed reserves? (c) Suppose a crisis in the banking sector shook consumer condence in banks. How might that affect the money multiplier? Would this affect the ability of the Fed to change the total money supply? Explain
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