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The Fed Conducts an Open-Market Sale of Treasury Bills of $5

Question 5

Multiple Choice

The Fed conducts an open-market sale of Treasury bills of $5 million.If the required reserve ratio is 0.20, what change in the money supply can be expected using the oversimplified money multiplier?


A) $25 million
B) $5 million
C) 0
D) −$5 million
E) −$25 million

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