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July 30, 2015

Homework Help: economics

Posted by jill on Friday, May 24, 2013 at 11:15am.

Am i right, just checking as too many wrong homework assignments at the start of this semester have messed up my grades

If the required reserve ratio is 0.2, by how much could the money supply expand if the central bank purchased 2 billion worth of bonds?

2.0 billion x 0.20 = 400 million to be held in reserve, which means that the money supply increases by, 1.6 billion.

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