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If the reserve requirement of the Federal Reserve System is 25%, and assume that banks do not hold excess reserves and the public holds no
If the reserve requirement of the Federal Reserve System is 25%, and assume that banks do not hold excess reserves and the public holds no cash. The Federal reserve decides to increase the money supply by $100 million. Will the Federal Reserve buy or sell bonds? How much bonds does the Federal Reserve buy or sell to achieve its goal?
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