In a simplified banking system in which all banks are subject to a 10 percent required reserve
Question:
In a simplified banking system in which all banks are subject to a 10 percent required reserve ratio, a $1,000 open market sale by the Fed to a bank would cause the money supply to:
a. Increase by $1,000.
b. Increase by $100,000.
c. Decrease by $10,000.
d. Decrease by $1,000.
e. Remain unchanged.
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