Business, 18.07.2020 18:01 andria89

The Fed wants to increase the money supply (which is currently $7,000) by $350. The money multiplier is 5, and people hold no cash. For each 1 percentage point the discount rate falls, banks borrow an additional $20. Explain how the Fed can achieve its goals using the following tools: a. Change the reserve requirement. Instructions: Enter your response rounded to the nearest whole number. The Fed should lower the reserve requirement to percent. b. Change the discount rate. Instructions: Enter your response rounded to two decimal places. The Fed should lower the rate by percentage points. c. Use open market operations. Instructions: Enter your response rounded to two decimal places. The Fed should buy $ worth of bonds.

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The Fed wants to increase the money supply (which is currently $7,000) by $350. The money multiplier...

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