If the Money Multiplier Is 3 and the Fed Wants

question 88

Multiple Choice

If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could

• A)buy $300,000 worth of bonds.
• B)buy $225,000 worth of bonds.
• C)sell $300,000 worth of bonds.
• D)sell $225,000 worth of bonds.

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Definitions:

Excise Duties

Taxes imposed on specific goods, such as tobacco and alcohol, often aimed at discouraging their use or generating revenue.

Tariffs

Taxes imposed on imported goods and services, intended to raise their price and protect domestic industries.

Trade Barriers

Restrictions imposed by a government on the importation or exportation of goods to protect domestic industries.

Mutual Economic Growth

a situation in which multiple parties or countries experience simultaneous increases in economic development and prosperity through cooperation or beneficial policies.