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ii. Exptain the process by which the Fed's initial bond purchase leads to a proportionally larger increase in the money supply. iii. Using correctly labelled
ii. Exptain the process by which the Fed's initial bond purchase leads to a proportionally larger increase in the money supply. iii. Using correctly labelled graphs, show the effect of the Fed's bond purchase on both the short-run and long-run Phillips Curve and to aggregate demand a/or aggregate supply. d. Assume that instead of just buying bonds, the Fed decides to lower the reserve requirement to 0.1. Calculate the size of the money multiplier following the decrease in the reserve ratio. ii. Assume that "Commercial Bank X" has total deposits equaling $400 million and had no excess reserves before the Fed lowered the reserve requirement. How much will "Bank X's" excess reserves change by following the Fed's policy? iii. Assume "Bank X" loans out its newly acquired excess reserves. Calculate the total change in the money supply that could result from these new lnnnc
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