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Suppose the Fed Carries Out an Open Market Purchase and Credits

Question 46

Multiple Choice

Suppose the Fed carries out an open market purchase and credits the account of a bank by $160,000. Further suppose that the reserve ratio (RR) is 10%. By how much is the money supply expected to change?


A) $160,000
B) $1.6 million
C) $16 million
D) $1.76 million

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