Multiple Choice
Assume all banks in the system started have a 10 percent required reserve ratio and the Fed made a $20,000 open market purchase. The result would be a(n) :
A) $200,000 expansion of the money supply.
B) $20,000 expansion of the money supply.
C) $20,000 contraction of the money supply.
D) infinite contraction of the money supply.
Correct Answer:
Verified
Correct Answer:
Verified
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