Assume the required reserve ratio is 10 percent and the FOMC orders an open-market sale of $50 million in government securities from member banks. If the oversimplified money multiplier is assumed, then the money supply will
A. increase by $500 million.
B. increase by $100 million.
C. decrease by $100 million.
D. decrease by $500 million.
Answer: D
Economics
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