Multiple Choice
The reserve requirement is 4%, banks hold no excess reserves and people hold no currency. If the Fed sells $10,000 of bonds what happens to the money supply?
A) it increases by $250,000
B) it increases by $200,000
C) it decreases by $200,000
D) it decreases by $250,000
Correct Answer:
Verified
Correct Answer:
Verified
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