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If the Money Multiplier Is 3 and the Fed Buys

Question 11

Multiple Choice

If the money multiplier is 3 and the Fed buys $50,000 worth of bonds, what happens to the money supply?

A) It increases by $100,000.
B) It increases by $150,000.
C) It decreases by $100,000.
D) It decreases by $200,000.

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