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If the Money Multiplier Is 2 and the Fed Buys

Question 9

Multiple Choice

If the money multiplier is 2 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 $150,000

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