Suppose the Fed purchases $100 million of U.S. securities from security dealers. If the reserve requirement is 20 percent, the currency holdings of the public are unchanged, and banks have zero excess reserves both before and after the transaction, the total impact on the money supply will be a:
A. $100 million decrease in the money supply.
B. $100 million increase in the money supply.
C. $200 million increase in the money supply.
D. $500 million increase in the money supply.
Answer: D
Economics
You might also like to view...
According to the textbook, when claim they are using the cost-plus-markup formula, they
A) usually choose a 10 percent markup B) usually choose a 50 percent markup C) usually choose a 100 percent markup D) might not be correctly describing their price-setting behavior.
Economics
One attitude shift in the United States is that people are beginning ___________ at an earlier age
a. Travel planning b. Career planning c. Retirement planning d. Estate planning
Economics