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Imagine that Clarice is a board member at the Fed. She is a monetarist with years of experience in investment banking and risk management. When
Imagine that Clarice is a board member at the Fed. She is a monetarist with years of experience in investment banking and risk management. When the nation suffers a serious economic disaster owing to low productivity and high unemployment, she seeks to take corrective action through the Fed's economy restoration programs. Considering that the situation is characterized by low productivity and high unemployment, Clarice understands that the immediate requirement is to increase money supply. In this scenario, which of the following actions should Clarice and her colleagues take to increase the money supply? Multiple Choice Mandate that member banks keep more of their money out of circulation. Prevent member banks from using more of their money for loans to consumers and firms. Lower the interest rate on loans to member banks. Sell government securities. Raise the percentage of funds that banks must hold in reserve
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