Suppose the Fed Sells $100 of Government Securities

question 66

Multiple Choice

Suppose the Fed sells $100 of government securities. If the desired reserve ratio is 20 percent and there is no currency drain, then the quantity of money

• A)decreases by $80.
• B)decreases by $400.
• C)decreases by $100.
• D)increases by $100.
• E)decreases by $500.

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