Answer to Question #111316 in Microeconomics for Antonio

Question #111316
Suppose the Federal Reserve decided to purchase $30 billion worth of government securities (bonds) in the open market.
By how much would M1 change initially if the entire $30B is deposited into transition accounts?
1
Expert's answer
2020-04-22T11:03:04-0400

purchase= $30 billion

deposit=$30 billion

M1 would change initially as;

\delta M1=3/100\times30 = $90 million


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