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Explain whether each of the following events increases or decreases the money supply. a. The Fed buys bonds in open-market operations. b. The Fed reduces the reserve requirement. c. The Fed increases the interest rate it pays on reserves. d. Citibank repays a loan it had previously taken from the Fed. e. After a rash of pickpocketing, people decide to hold less currency. f. Fearful of bank runs, bankers decide to hold more excess reserves. g. The FOMC increases its target for the federal funds rate.

BuyFind

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

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Chapter
Section
Chapter 11, Problem 2PA
Textbook Problem

Explain whether each of the following events increases or decreases the money supply.

a. The Fed buys bonds in open-market operations.

b. The Fed reduces the reserve requirement.

c. The Fed increases the interest rate it pays on reserves.

d. Citibank repays a loan it had previously taken from the Fed.

e. After a rash of pickpocketing, people decide to hold less currency.

f. Fearful of bank runs, bankers decide to hold more excess reserves.

g. The FOMC increases its target for the federal funds rate.

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