Suppose the reserve ratio of a bank is 0.125 and the Fed buys $10 billion worth of government bonds. What is the maximum impact this has on the money supply? O $80 billion O -S15.625 billion $15.625 billion $125 billion

Suppose the reserve ratio of a bank is 0.125 and the Fed buys $10 billion worth of government bonds. What is the maximum impact this has on the money supply? O $80 billion O -S15.625 billion $15.625 billion $125 billion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose the reserve ratio of a bank is 0.125 and the Fed buys $10 billion worth of government bonds. What is the
maximum impact this has on the money supply?
O $80 billion
O-$15.625 billion
$15.625 billion
O $125 billion

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