question archive Assume the banking system contains the following amounts: Total reserves $90 billion Transactions deposits $900 billion Cash held by public $100 billion Reserve requirement 0
Assume the banking system contains the following amounts: Total reserves $90 billion Transactions deposits $900 billion Cash held by public $100 billion Reserve requirement 0
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Assume the banking system contains the following amounts:
| Total reserves | $90 billion |
| Transactions deposits | $900 billion |
| Cash held by public | $100 billion |
| Reserve requirement | 0.10 |
What three steps could the Fed take to offset that potential growth in M1?
O Raise the reserve requirement, raise he discount rate, and use open market purchases.
O Lower the reserve requirement, raise the reserve requirement, and use open market sales.
O Lower the reserve requirement, raise the discount rate, and use open market sales.
O Raise the reserve requirement, raise the discount rate, and use open market sales.
Option 1
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