Assume that the economic news is not good

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1.The Federal Reserve purchases $100 million worth of government securities in the open market. If the required reserve ratio is .6, what is the maximum possible increase in the money supply?
2.Please explain how the change in the money supply may impact AD and real GDP
3.Suppose that the economic news is not good and businesses become pessimistic about the future. How would this change in attitude affect the investment demand curve and the impact on real GDP?
Solution Summary

The Fed purchase of bonds on the open market and how it affects the money supply. Changes in attitudes and how they shift the investment demand and GDP.
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Reference no: EM1337634

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