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Suppose the public holds 100% of their money as currency. Moreover, the central bank requires banks to maintain a reserve-deposit ratio of 15%. What will
Suppose the public holds 100% of their money as currency. Moreover, the central bank requires banks to maintain a reserve-deposit ratio of 15%. What will be the change in the total money supply if the central bank sells $5 million of government bonds to the public who uses their money to pay for these bonds (round to the nearest decimal point)? a. The money supply will increase by $5 million b. The money supply will decrease by $33.3 million c. The money supply will decrease by $5 million d. The money supply will increase by $33.3 million e. All of the answers here are incorrect
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