Explain What Would Happen to the Money Supply If the Federal

question 62

Essay

Explain what would happen to the money supply if the Federal Reserve made an open market sale of $5 million worth of securities to a private citizen. Assume that the bank with which the private citizen has an account is all "loaned up", has reserves of $20 million, deposits of $100 million and must follow a required reserve ratio of 20%.

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Definitions:

Safe Home Environment

A living environment where safety measures are taken to protect the occupants from accidents, harm, and health hazards.

Feet Outward

A description of foot alignment where the toes are pointed away from each other.

Shoulder Width

The measurement or distance across the shoulders from one shoulder joint to the other.

Wheelchair

A wheelchair is a chair mounted on wheels, which is designed to be a means of transportation for a person who is unable to walk due to illness, injury, or disability.