Business, 26.11.2019 02:31 ultimatesaiyan

Suppose the money supply (as measured by checkable deposits) is currently $900 billion. the required reserve ratio is 30%. banks hold $270 billion in reserves, so there are no excess reserves.

the federal reserve ("the fed") wants to increase the money supply by $10 billion, to $910 billion. it could do this through open-market operations or by changing the required reserve ratio. assume for this question that you can use the simple money multiplier.

if the fed wants to increase the money supply using open-market operations, it should (buy/sell) billion worth of u. s. government bonds.

if the fed wants to increase the money supply by adjusting the required reserve ratio, it should (increase/decrease) the required reserve ratio.

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Suppose the money supply (as measured by checkable deposits) is currently $900 billion. the required...

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