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Table 29-1 Effects of an open-market transaction on the balance sheets of Banks and the Fed (in millions of dollars) Banks Federal Reserve System Assets Liabilities Assets Liabilities Bank Reserves: Reserves: +$20 U.S. Gov't Sec. +$20 +$20 U.S. Gov't Securities:-$20 In Table 29-1, if the required reserve ratio is 5 percent, what will happen to the money supply? Use the oversimplified money multiplier in your calculations. The money supply will not change. The money supply will decrease by $400 million. The money supply will decrease by $100 million. The money supply will increase by $400 million. The money supply will increase by $20 million.

Table 29-1 Effects of an open-market transaction on the balance sheets of Banks and the Fed (in millions of dollars) Banks Federal Reserve System Assets Liabilities Assets Liabilities Bank Reserves: Reserves: +$20 U.S. Gov't Sec. +$20 +$20 U.S. Gov't Securities:-$20 In Table 29-1, if the required reserve ratio is 5 percent, what will happen to the money supply? Use the oversimplified money multiplier in your calculations. The money supply will not change. The money supply will decrease by $400 million. The money supply will decrease by $100 million. The money supply will increase by $400 million. The money supply will increase by $20 million.

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter11: The Monetary System
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Table 29-1 Effects of an open-market transaction on the balance sheets of Banks and the Fed (in millions of dollars) Banks Federal Reserve System Assets Liabilities Assets Liabilities Bank Reserves: Reserves: +$20 U.S. Gov't Sec. +$20 +$20 U.S. Gov't Securities:-$20 In Table 29-1, if the required reserve ratio is 5 percent, what will happen to the money supply? Use the oversimplified money multiplier in your calculations. The money supply will not change. The money supply will decrease by $400 million. The money supply will decrease by $100 million. The money supply will increase by $400 million. The money supply will increase by $20 million.
Transcribed Image Text:Table 29-1 Effects of an open-market transaction on the balance sheets of Banks and the Fed (in millions of dollars) Banks Federal Reserve System Assets Liabilities Assets Liabilities Bank Reserves: Reserves: +$20 U.S. Gov't Sec. +$20 +$20 U.S. Gov't Securities:-$20 In Table 29-1, if the required reserve ratio is 5 percent, what will happen to the money supply? Use the oversimplified money multiplier in your calculations. The money supply will not change. The money supply will decrease by $400 million. The money supply will decrease by $100 million. The money supply will increase by $400 million. The money supply will increase by $20 million.
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