Question
Suppose the Federal Reserve Banks buy $8 in securities from the public. As a result of this transaction (Assume the required reserve ratio is 25
Suppose the Federal Reserve Banks buy $8 in securities from the public. As a result of this transaction (Assume the required reserve ratio is 25 percent)
a. | the supply of money will directly decrease by $8 and the money-creating potential of the commercial banking system will be unaffected. | |
b. | the supply of money will directly increase by $8 and the money-creating potential of the commercial banking system will increase by $24. | |
c. | the supply of money will be unaffected but the money-creating potential of the commercial banking system will increase by $24. | |
d. | the supply of money will directly increase by $2 and the money-creating potential of the commercial banking system will increase by $6. |
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Economics
Authors: Campbell R. McConnell, Stanley L. Brue, Sean M. Flynn
18th edition
978-0077413798, 0-07-336880-6, 77413792, 978-0-07-33688, 978-0073375694
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