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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091985
BuyFind

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091985

Solutions

Chapter
Section
Chapter 11, Problem 11PA
Textbook Problem

Assume that the reserve requirement is 20 percent. Also assume that banks do not hold excess reserves and there is no cash held by the public. The Fed decides that it wants to expand the money supply by $40 million.

a. If the Fed is using open-market operations, will it buy or sell bonds?

b. What quantity of bonds does the Fed need to buy or sell to accomplish the goal? Explain your reasoning.

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Chapter 11 Solutions

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