The Money Supply in Macroland Is Currently 2,500,bank Reserves Are

question 76

Multiple Choice

The money supply in Macroland is currently 2,500,bank reserves are 400,currency held by the public is 500,and the banks' desired reserve-deposit ratio is 20%.Assuming that the values of currency held by the public and the desired reserve-deposit ratio do not change,if the Central Bank of Macroland wishes to increase the money supply to 3,000,then it should conduct an open-market _________ government bonds to/from the public.

• A) purchase of 100
• B) purchase of 250
• C) purchase of 500
• D) sale of 100
• E) sale of 500

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Definitions:

Initial Purchase Price

The amount paid to buy a good or service for the first time, not including additional costs like maintenance or insurance.

Present Value

is a financial concept that calculates the current worth of an amount of money that is to be received in the future, taking into account a specific rate of interest.

Cigarette Purchases

The act of buying cigarettes, often analyzed in economics to study the effects of taxes, regulations, and other factors on consumer behavior.

Working Lifetime

The period in an individual's life during which they are active in the workforce, contributing labor in exchange for income.