Multiple Choice
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.
Correct Answer:
Verified
Correct Answer:
Verified
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