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The Federal Reserve buys $44.00 million in Treasury securities. If the required reserve ratio is 30.00%, and all currency is deposited into the banking system, and banks hold excess reserves of 10%, then the maximum amount the money supply can increase is $ million. (Insert your answer in millions; if you think the answer is $30 million, just enter 30. Round your answer to two decimal places.)

Respuesta :

Answer:

the money supply would increased by 98

Explanation:

The computation of the maximum amount by which the money supply could increase is shown below;

= Deposit × 1 ÷ Reserve ratio

= 44 × 1 ÷ (0.35 + 0.10)

= 44 × 1 ÷ 0.45

= 44 × 2.2222

= 98

Hence, the money supply would increased by 98

It could be determined by applying the above formula

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