miasmiles7573 miasmiles7573
  • 20-03-2020
  • Business
contestada

Assume that the banking system is loaned up and that any open-market purchase by the Fed directly increases reserves in the banks. If the required reserve ratio is 0.2, by how much could the money supply expand if the Fed purchased $2 billion worth of bonds?

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hamzafarooqi188 hamzafarooqi188
  • 24-03-2020

Answer:

Money Supply Would Expand by = 2 billion /0.2 = $10 billion .

Explanation:

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