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Business, 16.07.2021 02:00 cathyfrawley

1. Assume that banks hold no excess reserves and that all currency is deposited into the banking system. If the required reserve ratio is 10.00%, and the Federal Reserve wants to increase the money supply by $35.00 million, the Fed would need to make an open market purchase of $million. 2. Assume that banks hold no excess reserves and that all currency is deposited into the banking system. If the required reserve ratio is 15.00%, and the Federal Reserve wants to decrease the money supply by $60.00 million, the Fed would need to make an open market sale of $million.
3. Suppose that banks decide to hold excess reserves. In order for the Federal Reserve to change the money supply by the same amounts as in parts 1 and 2, it would need to make:.
A. a larger open market purchase but a smaller open market sale.
B. a smaller open market purchase and a smaller open market sale.
C. a larger open market purchase and a larger open market sale.
D. a smaller open market purchase but a larger open market sale.

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