a) Assume a 1% reserve ratio. The potential money multiplier = Α ; b) Using the calculated potential money multiplier, calculate the ultimate increase in the money supply if the Fed buys $5 million of bonds from the public. Ultimate increase = Write numbers in front of million only; no commas.

Economics (MindTap Course List)
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Author:Roger A. Arnold
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Chapter13: The Federal Reserve System
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a) Assume a 1% reserve ratio. The potential money multiplier
=
Α
;
b) Using the calculated potential money
multiplier, calculate the ultimate increase in the money supply
if the Fed buys $5 million of bonds from the public. Ultimate
increase =
Write numbers in front of million only; no commas.
Transcribed Image Text:a) Assume a 1% reserve ratio. The potential money multiplier = Α ; b) Using the calculated potential money multiplier, calculate the ultimate increase in the money supply if the Fed buys $5 million of bonds from the public. Ultimate increase = Write numbers in front of million only; no commas.
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