Assuming that banks lend all of their access reserves and people deposit all of their money, what will the Fed have to do in order to increase the supply of money by $120 billion if the Required Reserves Ratio is .20? Select one: a. It needs to buy $20 billion dollar worth of bonds from banks b. It needs to buy $24 billion dollar worth of bonds from banks c. It needs to sell $20 billion dollar worth of bonds from banks d. It needs to sell $24 billion dollar worth of bonds from banks e. It needs to sell $40 billion dollar worth of bonds from banks
Assuming that banks lend all of their access reserves and people deposit all of their money, what will the Fed have to do in order to increase the supply of money by $120 billion if the Required Reserves Ratio is .20? Select one: a. It needs to buy $20 billion dollar worth of bonds from banks b. It needs to buy $24 billion dollar worth of bonds from banks c. It needs to sell $20 billion dollar worth of bonds from banks d. It needs to sell $24 billion dollar worth of bonds from banks e. It needs to sell $40 billion dollar worth of bonds from banks
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Monetary System
Section: Chapter Questions
Problem 10PA
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Assuming that banks lend all of their access reserves and people deposit all of their money, what will the Fed have to do in order to increase the supply of money by $120 billion if the Required Reserves Ratio is .20?
Select one:
a. It needs to buy $20 billion dollar worth of bonds from banks
b. It needs to buy $24 billion dollar worth of bonds from banks
c. It needs to sell $20 billion dollar worth of bonds from banks
d. It needs to sell $24 billion dollar worth of bonds from banks
e. It needs to sell $40 billion dollar worth of bonds from banks
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