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Suppose the Fed decreases required reserve ratio.

As a result of this policy, what will happen to the money supply?

 

Hint


Suppose the Fed sells T-bills.

As a result of this policy, what will happen to the money supply?

 

Hint


Consider the following balance sheet for TD Bank.

AssetsLiabilities
Reserves616Deposits2200
Loans1584

Suppose that someone deposited $700 at TD Bank.

Given this data, what is the maximum amount by which the money supply will increase?

Hint

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