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If the required reserve ratio is 20 percent and the Fed sells $10 million in securities, then the money supply will increase by $10 million. money supply will decrease by $10 million. foreign investment in US financial assets will decrease. money supply will increase by $50 million. money supply will decrease by $50 million.
Bro, did u even try it?
I did but I did not get any of the answers here
show me your work
@Hayhayz help me help this poor lad
I would say either of the two last ones but this isn't really my subject :/
wait, will it increase by 50 million because 10/0.20 is 50?
I am confused with the process
Ive had enough of this nonsense
Sorry, this is why you shouldn't trust me on this.
Am I right or not?
@Hayhayz knows the answer to your situation, for she is the solution to all problems
probably increase that would be my best guess
sorry that I can't help much
when the fed sells securities, it sells money to banks ... the supply of money to loan out increases
thank you, will it be C then?
your options are not labeled by letters here
money supply increases by 50 million
if i recall correctly, the money supply would increase more than the amount sold ... so as an educated guess i would go with that as well - since i dont recall the formulas for it from soo long ago :)
ok :) thank you
we have 8mil we can offer since we have to hold back 20% of it when the loans are repaid, we can loan out 8(.8) of it again, and then again ... it becomes a geometric sequence 8/(1-.8) = 40 is what i would have thought of if i didnt have options. so 50 seems reasonable to me