If the Fed Decides to Use an Open Market Operation

question 47

Multiple Choice

If the Fed decides to use an open market operation to reduce the money supply by $1 million, and if the money multiplier is 10, then what total amount of Treasury securities must the Fed initially sell?

• A) $10,000,000.
• B) $1,000,000.
• C) $100,000.
• D) $10,000.

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Definitions:

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