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Question
If the actual money multiplier equals the potential money multiplier and if the Fed wishes to reduce the money supply by $1 million when the reserve ratio is 20 percent, then the Fed should
A) sell $200,000 of government securities.
B) buy $200,000 of government securities.
C) sell $500,000 of government securities.
D) buy $500,000 of government securities.
Answer
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Related questions
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Why?
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