Answer the next question on the basis of the following consolidated balance sheet the commercial banking system. Assume that the reserve requirement is 10%. All figures are in billions. Liabilities & Net Worth (billions of Assets (billions of dollars) Reserves Securities dollars) $60 Checkable deposits 140 Stock shares 260 400 $600 260 Loans Property Suppose the Fed wants to increase the money supply by $400 billion to drive down interest rates and stimulate the economy. Assuming that the money multiplier is operating to full effect, to accomplish the desired increase, the Fed could O A) buy $20 billion of U.S. securities from the banks B) sell $20 billion of U.S. securities to the banks C) buy $40 billion of U.S. securities from the banks D) sell $40 billion of U.S. securities to the banks

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Answer the next question on the basis of the following consolidated balance sheet
the commercial banking system. Assume that the reserve requirement is 10%. All
figures are in billions.
Liabilities & Net Worth (billions of
Assets (billions of dollars)
Reserves
Securities
dollars)
$60 Checkable deposits
140 Stock shares
260
400
$600
260
Loans
Property
Suppose the Fed wants to increase the money supply by $400 billion to drive down
interest rates and stimulate the economy. Assuming that the money multiplier is
operating to full effect, to accomplish the desired increase, the Fed could
O A) buy $20 billion of U.S. securities from the banks
B) sell $20 billion of U.S. securities to the banks
C) buy $40 billion of U.S. securities from the banks
D) sell $40 billion of U.S. securities to the banks
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Transcribed Image Text

Answer the next question on the basis of the following consolidated balance sheet the commercial banking system. Assume that the reserve requirement is 10%. All figures are in billions. Liabilities & Net Worth (billions of Assets (billions of dollars) Reserves Securities dollars) $60 Checkable deposits 140 Stock shares 260 400 $600 260 Loans Property Suppose the Fed wants to increase the money supply by $400 billion to drive down interest rates and stimulate the economy. Assuming that the money multiplier is operating to full effect, to accomplish the desired increase, the Fed could O A) buy $20 billion of U.S. securities from the banks B) sell $20 billion of U.S. securities to the banks C) buy $40 billion of U.S. securities from the banks D) sell $40 billion of U.S. securities to the banks

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