If the Money Multiplier Is 2 and the Fed Wants

question 171

Multiple Choice

If the money multiplier is 2 and the Fed wants to increase the money supply by $900,000, it could

• A)buy $300,000 worth of bonds.
• B)buy $450,000 worth of bonds.
• C)sell $300,000 worth of bonds.
• D)sell $450,000 worth of bonds.

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Definitions:

Solve

Finding the value of variables that satisfy a given mathematical equation or inequality.

Linear Equation

An equation between two variables that produces a straight line when graphed.

Solve

To find an answer to a problem or the solution to an equation.

Equation

A mathematical statement that asserts the equality of two expressions, usually shown by the symbol "=".