If the Federal Reserve conducts a $10 million open-market sale and the reserve requirement is 20%, the maximum change in the money supply is:

Name: If the Federal Reserve conducts a $10 million open-market sale and the reserve requirement is 20%, the maximum change in the money supply is:
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The money multiplier is 1/reserve requirement, which is 1/0.2 = 5. The maximum change in the money supply is the open-market sale amount multiplied by the money multiplier: $10 million * 5 = $50 million decrease.

If the Federal Reserve Conducts a $10 Million Open-Market Sale