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Fred and fred puts all the money

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a) Draw the T-accounts for Fred's Bank if the FED buys a $20,000 treasury security from Fred and Fred puts all the money he gets for it in the bank. Assume the reserve requirement set by the FED is 8%.

b) Economist A claims that this will result in a change in the money supply of $250,000. Explain how this is possible.

c) Economist B claims that the data shows the money supply only went up by $200,000. Explain how this is possible.

Reference no: EM131489491

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