Suppose That the Fed Undertakes an Open Market Purchase of $25

question 3

Multiple Choice

Suppose that the Fed undertakes an open market purchase of $25 million worth of securities from a bank.If the required reserve ratio is 9%,what is the resulting change in checkable deposits (or the money supply) ,assuming that there are no cash leakages and that banks hold zero excess reserves?

• A) $277.8 million
• B) $225 million
• C) $28 million
• D) $34 million

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Definitions:

Guns

Firearms or weapons designed to discharge projectiles (bullets, shot, shells) at high speed, used for hunting, sport, self-defense, or military purposes.

United States

A country in North America consisting of 50 states, a federal district, and various territories, known for its diverse geography and population.

Economic Activity

The production, distribution, and consumption of goods and services within an economy.

Acquiring Food

The process of obtaining food through various means such as farming, hunting, gathering, or purchasing, crucial for survival and economic activity.