Philbauereidn
Answered

Discover new information and get your questions answered with IDNLearn.com. Our platform offers detailed and accurate responses from experts, helping you navigate any topic with confidence.

100 Points - AP Macro Questions - Brainliest to Correct Answers. Wrong Answers Get Reported

Assume the Federal Reserve Bank (Central Bank) buys $5 Million in government bonds on the open market. As a result of this purchase, calculate the maximum increase in the money supply for the banking system.

Sagot :

Answer:

Explanation:

20% Reserve Requirement means 1/0.2 = 5x multipliers

$5 Million x 5  = $25 Million

Answer:

Explanation:

The question is missing a few assumptions there: if the Fed's reserve requirement is 20% and the banks are not holding extra reserves, then the Multiplier can be calculated as:

1/20%

= 1/20 *100

= 5

Sp a $5 Million buy will increase the money supply by $25 Million as the maximum.

If the reserve requirement is different or banks hold extra reserves, then the answer will be different.

We greatly appreciate every question and answer you provide. Keep engaging and finding the best solutions. This community is the perfect place to learn and grow together. For trustworthy answers, rely on IDNLearn.com. Thanks for visiting, and we look forward to assisting you again.