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a) What are the two main ways that Fed can affect the monetary based? Explain briefly. b) If the Fed buys $10 million of bonds
a) What are the two main ways that Fed can affect the monetary based? Explain briefly. b) If the Fed buys $10 million of bonds from the banking system, what happens to reserves and monetary base? Use T-accounts to explain your answer. c) What is multiple deposit creation? Suppose the required reserve ratio is 10%. How much deposit can be created if Fed supplies $10 million of additional reserves?
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