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Suppose r = .8 and the Fed buys $5 million in open market operations (OMO). At the same time, a the Fed lends an additional

Suppose r = .8 and the Fed buys $5 million in open market operations (OMO).

At the same time, a the Fed lends an additional $3 million to via a discount loan to a bank.

By how much will the money supply change?

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