The Fed Makes an Open Market Operation Purchase of $200,000

question 327

Multiple Choice

The Fed makes an open market operation purchase of $200,000. The currency drain ratio is 33.33 percent and the desired reserve ratio is 10 percent. By how much does the quantity of money increase?

• A)$800,000
• B)$333,333
• C)$2,000,000
• D)$618,604
• E)$465,116

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