Fed action intended to increase or decrease interest rates

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Reference no: EM131970102

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)

Reference no: EM131970102

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