Question

I will medal, I need help with economics please!

Answer 1

If the required reserve ratio is 20 percent and the Fed sells $10 million in securities, then the

money supply will increase by $10 million.
money supply will decrease by $10 million.
foreign investment in US financial assets will decrease.
money supply will increase by $50 million.
money supply will decrease by $50 million.

Answer 2

Bro, did u even try it?

Answer 3

I did but I did not get any of the answers here

Answer 4

show me your work

Answer 5

@Hayhayz help me help this poor lad

Answer 6

I would say either of the two last ones but this isn't really my subject :/

Answer 7

wait, will it increase by 50 million because 10/0.20 is 50?

Answer 8

I am confused with the process

Answer 9

Ive had enough of this nonsense

Answer 10

Sorry, this is why you shouldn't trust me on this.

Answer 11

Am I right or not?

Answer 12

@Hayhayz knows the answer to your situation, for she is the solution to all problems

Answer 13

probably increase that would be my best guess

Answer 14

sorry that I can't help much

Answer 15

when the fed sells securities, it sells money to banks ... the supply of money to loan out increases

Answer 16

thank you, will it be C then?

Answer 17

your options are not labeled by letters here

Answer 18

money supply increases by 50 million

Answer 19

if i recall correctly, the money supply would increase more than the amount sold ... so as an educated guess i would go with that as well - since i dont recall the formulas for it from soo long ago :)

Answer 20

ok :) thank you

Answer 21

we have 8mil we can offer since we have to hold back 20% of it

when the loans are repaid, we can loan out 8(.8) of it again, and then again ... it becomes a geometric sequence

8/(1-.8) = 40 is what i would have thought of if i didnt have options. so 50 seems reasonable to me