Please solve these questions and explain how you solve them. If the Fed sells $50 billion in government securities with

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answerhappygod
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Please solve these questions and explain how you solve them. If the Fed sells $50 billion in government securities with

Post by answerhappygod »

Please solve these questions and explain how you solve them.
If the Fed sells $50 billion in government securities with a
reserve requirement of 25%, calculate the maximum change in
money.
If the Fed wants to increase the money supply by $800 billion,
given a reserve requirement of 10%, what would they do? (Note
that for this problem, you are given the change in the money supply
and must work backwards to calculate the initial bond
purchase.)
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