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Suppose that the money multiplier is fixed and the Feds balance sheet is ...

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Accounting

Suppose that the money multiplier is fixed and the Feds balance sheet is

Federal Reserve Bank

Asset

Liabilities

Securities

$900

Currency held by nonbank public

$700

Gold

$100

Vault cash held by banks

$100

Reserve deposits

$200

Total assets

$1000

Total liabilities

$1000

and the commercial banks balance sheet is

Consolidated Balance Sheet of Banks

Assets

Liabilities

Vault cash

$100

Deposits

$3000

Reserve deposits

$200

Loans

$2700

Total assets

$3000

Total liabilities

$3000

Suppose that the Fed increases the monetary base by 15%. The money supply will

A.

increase by $555
B.

increase by $450.
C.

increase by $360
D.

increase by $150
E.

increase by $1000

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