Business Finance 2023 Macroeconomics Question In 300 Words

2023 Exercise 2 Money Supply and fractional reserve banking Assume that the reserve requirement is 8 percent All other things

Exercise #2 – Money Supply and fractional reserve banking 

Assume that the reserve requirement is 8 percent. All other things equal, will the money supply expand more if the Federal Re serve buys $4 billion worth of bonds or if someone deposits in a bank $4 billion that they had been hiding in their cookie jar? If one creates more, how much more does it create? Support your thinking.

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