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Under these circumstances if the fed buys a treasury

Since October 2008, the Federal Reserve has started paying interest on excess reserves held by banks. Under these circumstances, if the Fed buys a Treasury security worth $200 million from a bank, which of the following can be expected regarding the change in the money supply? Assume that the required reserve ratio is 10%, and that all currency is deposited into the banking system.

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Business Management: Under these circumstances if the fed buys a treasury

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