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16 The FOMC has instructed the FRBNY Trading Desk to sell $250 million Treasury securities. The Federal Reserve has set the reserve requirement at 4.75%
16 The FOMC has instructed the FRBNY Trading Desk to sell $250 million Treasury securities. The Federal Reserve has set the reserve requirement at 4.75% of transaction deposits. Assume that US banks withdraw all excess reserves and give out loans. What is the full effect of this sale on the money supply? Select one: a. The money supply increases by $11.88 billion b. The money supply decreases by $5.26 billion c. None of the answers are correct d. The money supply increases by $5.26 billion e. The money supply decreases by $11.88 billion
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