Multiple Choice
The Federal Reserve buys $10,000 of government securities from commercial banks. If the required reserve ratio is 25%, what is the maximum amount of change in the nation's money supply? Assume that no banks keep excess reserves and no individuals or firms hold cash.
A) expand by $10,000
B) expand by $30,000
C) expand by $40,000
D) expand by $7,500
Correct Answer:
Verified
Correct Answer:
Verified
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