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The Fed wants to increase the money supply (which is currently 6,000) by 300. The money multiplier is 4, and people hold no cash. For each 1 percentage point the discount rate falls, banks borrow an additional 30. Explain how the Fed can achieve its goals using the following tools: a. Change the reserve requirement. Instructions: Round your answer to the nearest whole number. The Fed should the reserve requirement to percent. b. Change the discount rate. Instructions: Round your answer to 2 decimal places. The Fed should the rate by percentage points. c. Use open market operations. Instructions: Round your answer to 2 decimal places. The Fed should $ worth of bonds.

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91829480

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