Suppose Banks Have $25 Million in Reserves,the Reserve Requirement Is

question 143

Essay

Suppose banks have $25 million in reserves,the reserve requirement is 5%,and people do not hold any cash outside of banks.If the Fed makes an open market sale of $1 million of government securities,by how much will the money supply change? (Assume that the public does not hold any of its money in the form of currency. )

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Definitions:

Symptom

A sign or indication of a condition, illness, or disease.

Sign

An object, quality, or event whose presence or occurrence indicates the probable presence or occurrence of something else.

Symptoms

Signs or indications of a condition, disease, or change in the body's state, experienced by an individual.

Signs

In psychopathology, what the clinician observes about a patient’s physical or mental condition.