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The reserve requirement in Petmeckistan is [20%]. If the central bank buys [$1000] in bonds, what is the maximum possible change in the money supply?
The reserve requirement in Petmeckistan is \[20\%\]. If the central bank buys \[\$1000\] in bonds, what is the maximum possible change in the money supply? Choose 1 answer: Choose 1 answer: (Choice A) The money supply increases by \[\$4000\] A The money supply increases by \[\$4000\] (Choice B) The money supply decreases by \[\$5000\]. B The money supply decreases by \[\$5000\]. (Choice C) The money supply increases by \[\$1000\] C The money supply increases by \[\$1000\] (Choice D) The money supply increases by \[\$5000\]. D The money supply increases by \[\$5000\]. (Choice E) The money supply decreases by \[\$1000\] E The money supply decreases by \[\$1000\]
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