Using the simply money multiplier model, what quantity of securities must the Federal Reserve purchase to...
Using the simply money multiplier model, what quantity of securities must the Federal Reserve purchase to generate an increase in the size of checkable deposits by $22,500, assuming the required reserve ratio is 4%?
Group of answer choices
A) 810
B) 850
C) 900
D) 920
Homework Answers
multiplier = 1/r = 1/0.04 = 25
So, to increase the size of checkable deposits by 22500, the quantity of securities that the Fed needs to purchase
= 22500/25
= 900
option(C)
Add Answer to:
Using the simply money multiplier model, what quantity of
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Using the simply money multiplier model, what quantity of securities must the Federal Reserve purchase to generate an increase in the size of checkable deposits by $22,500, assuming the required reserve ratio is 4%? 810 850 900 920 L > 5. During open market operations the Federal Reserve Bank purchases $120 million dollars worth of securities. The estimate, using the simply multiplier model is that this will raise checkable deposits in the economy by $750 million. In this, the required...
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