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Economics

The Fed wants to increase the money supply (which is currently 4,000) by 200. The money multiplier is 3. 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.

b. Change the discount rate.

c. Use open market operations.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91237776

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