plz answer a b c asap Assume the reserve requirement is 16% and the MPCdemand by $120 billion.Instructions: Enter your answers as a whole number.a. Suppose the Federal Reserve wants to increase investment demand to offset the reduction in aggregate demand. To accomplishthis goal, how much does investment demand need to increase?billion=0.75 for the economy when a stock market downturn reduces aggregateb. To increase investment demand by the desired amount, the Fed estimates that interest rates will need to decreaseand the money supply will need to increaseby $150 billion.c. In order to achieve the $150 billion change in the money supply, the Fed will make an open market purchase of $by 4%billion.

A change in Reserve requirement leads to change in the money supply. A rise in the reserve…

Assume the reserve requirement is 16% and the MPC = 0.75 for the economy when a stock market downturn reduces aggregate demand by $120 billion. Instructions: Enter your answers as a whole number. a. Suppose the Federal Reserve wants to increase investment demand to offset the reduction in aggregate demand. To accomplish this goal, how much does investment demand need to increase? $ billion b. To increase investment demand by the desired amount, the Fed estimates that interest rates will need to decrease and the money supply will need to increase ✓by $150 billion. c. In order to achieve the $150 billion change in the money supply, the Fed will make an open market purchase of $ ✓by 4% billion.

Assume the reserve requirement is 16% and the MPC = 0.75 for the economy when a stock market downturn reduces aggregate demand by $120 billion. Instructions: Enter your answers as a whole number. a. Suppose the Federal Reserve wants to increase investment demand to offset the reduction in aggregate demand. To accomplish this goal, how much does investment demand need to increase? $ billion b. To increase investment demand by the desired amount, the Fed estimates that interest rates will need to decrease and the money supply will need to increase ✓by $150 billion. c. In order to achieve the $150 billion change in the money supply, the Fed will make an open market purchase of $ ✓by 4% billion.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter24: Fiscal Policy

Section: Chapter Questions

Problem 15P

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