Scenario 13.2 Assume the following conditions hold.
Now the Federal Reserve engages in an open market operation by purchasing $1 billion worth of government bonds from private bond dealers, who then deposit the $1 billion in the banks.This acts to lower the equilibrium interest rate by 2 percent. Refer to Scenario 13.1.What is the ultimate change in the money supply following the open market operation by the Fed?
A)-$3 billion
B)-$0.33 billion
C)+$1 billion
D)+$2.01 billion
E)+$5.2 billion

Question

Scenario 13.2 Assume the following conditions hold.
 Now the Federal Reserve engages in an open market operation by purchasing $1 billion worth of government bonds from private bond dealers, who then deposit the $1 billion in the banks.This acts to lower the equilibrium interest rate by 2 percent.  Refer to Scenario 13.1.What is the ultimate change in the money supply following the open market operation by the Fed?
A)-$3 billion 
B)-$0.33 billion 
C)+$1 billion 
D)+$2.01 billion 
E)+$5.2 billion

Quizplus · Accepted Answer

The Answer of Scenario 13.2 Assume the following conditions hold.
 Now the Federal Reserve engages in an open market operation by purchasing $1 billion worth of government bonds from private bond dealers, who then deposit the $1 billion in the banks.This acts to lower the equilibrium interest rate by 2 percent.  Refer to Scenario 13.1.What is the ultimate change in the money supply following the open market operation by the Fed?
A)-$3 billion 
B)-$0.33 billion 
C)+$1 billion 
D)+$2.01 billion 
E)+$5.2 billion

Scenario 13.2 Assume the Following Conditions Hold