Multiple Choice
Assume that the currency-deposit ratio is 0.2 and the reserve-deposit ratio is 0.1.The Federal Reserve carries out open-market operations,purchasing $1 million worth of bonds from banks.This action will increase the money supply by
A) $1 million.
B) $2 million.
C) $3 million.
D) $4 million.
Correct Answer:
Verified
Correct Answer:
Verified
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