Multiple Choice
If all banks are subject to a uniform 25% reserve requirement and demand deposits are the only form of money,a $1,000 open market purchase by the Fed would cause the money supply to
A) increase by $1,000.
B) decrease by $1,000.
C) decrease by $4,000.
D) increase by $4,000.
Correct Answer:
Verified
Correct Answer:
Verified
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