Solved

If the Reserve Ratio Is 5 Percent, Banks Do Not

Question 181

Multiple Choice

If the reserve ratio is 5 percent, banks do not hold excess reserves, and people do not hold currency, then when the Fed sells $30 million worth of government bonds, bank reserves


A) decrease by $30 million and the money supply eventually decreases by $600 million.
B) increase by $30 million and the money supply eventually increases by $600 million.
C) decrease by $30 million and the money supply eventually decreases by $150 million.
D) increase by $30 million and the money supply eventually increases by $150 million.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents