Suppose the federal reserve decides to buy 100m in treasury, Ask an Expert

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Suppose the Federal Reserve decides to buy $100m in treasury bonds from US banks.

• Is the Fed’s action intended to increase or decrease interest rates?

• Assuming zero currency drain, what is the maximum increase in M2 from this action if the reserve requirement is 10%?

• Assuming zero currency drain, what is the maximum increase in M2 from this action if the reserve requirement is 0%? (Think carefully)

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92807755

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