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Money Supply Assignment | Homework For You

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December 11th, 2019

7. Suppose the reserve ratio is 10 percent, banks are all loaned up, and people hold only deposits and no currency. When the Fed sells $20 million worth of bonds to the public, bank reserves

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A. increase by $20 million and the money supply eventually increases by $20 million.

B. increase by $20 million and the money supply eventually increases by $200 million.

C. decrease by $2 million and the money supply eventually increases by $20 million.

D. decrease by $20 million and the money supply eventually decreases by $200 million.

E. None of the above. Get Economics homework help today

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