Answered: If rr 0.2 but legal rrr 0.1, BR $100,…

If rr 0.2 but legal rrr 0.1, BR $100, public's cash 50, the Fed buys government bonds worth $200 from you, and you deposit $150 in your bank, calculate the change in M1.

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 8PA

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If rr 0.2 but legal rr 0.1, BR $100, public's cash 50, the Fed buys government
bonds worth $200 from you, and you deposit $150 in your bank, calculate the change in
M1.

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