If the Federal Reserve sells bonds, the required reserve ratio is 0.25 and the money supply decreases by $10,000 . how did the Fed accomplish this change?
a. The Fed sold $10,000 in bonds.
b. The Fed sold $7, 500 in bonds.
c. The Fed sold $2,500 in bonds.
d. The Fed sold $7,518 in bonds.
e. The Fed sold $40,000 in bonds.
C
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In the absence of externalities, which of the following is true of economic efficiency?
a. It occurs where marginal costs of production equal marginal benefits of consumption. b. It occurs where quantity supplied is equal to quantity demanded. c. It maximizes the total net benefits to consumers and producers. d. All of the above. e. None of the above.
Refer to the diagram. If the full-employment GDP is Y 5 , government should:
A. incur neither a deficit nor a surplus.
B. cut taxes and government spending by equal amounts.
C. reduce taxes and increase government spending.
D. increase taxes and reduce government spending.