(Answered) Since october 2008 the federal reserve has started paying

Management Studies

Since October 2008, the Federal Reserve has started paying interest on excess reserves held by banks. Under these circumstances, if the Fed buys a Treasury security worth $200 million from a bank, which of the following can be expected regarding the change in the money supply? Assume that the required reserve ratio is 10%, and that all currency is deposited into the banking system.

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