What will be the total increase in the money supply

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Reference no: EM13243628

Suppose the Fed purchases $100 million worthof government securities in the open market.

a. If the securities are purchased from thepublic, what is the initial impact on M1?

b. How will M1 change initially if the securitieswere purchased from banks?

c. If the required reserve ratio is .6, what will be the total increase in the money supply for both a and b?

Reference no: EM13243628

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