Assume a nation has a fixed exchange rate, and the central bank decreases the reserve requirement. What is the net effect on the money supply (given)? Answer assuming all the adjustments have worked their way through the macroeconomic system, and it is in equilibrium
a. The change in the money supply is ambiguous.
b. The money supply can not change. This is an example of the "Impossible Trilogy."
c. The money supply rises.
d. The money supply falls.
.B
Economics
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