The graph represents a hypothetical picture of the U.S. economy. The Federal Reserve (Fed) determines that the economy must be s

Question

2 years ago

8

The graph represents a hypothetical picture of the U.S. economy. The Federal Reserve (Fed) determines that the economy must be s

timulated. Assume that the Fed will use open market operations, the reserve ratio is 0.1, and the desired change in the money supply is an increase of $650 billion.

SAT

1 answer:

Thepotemich [5.8K] · Answer 1 · 2023-05-28T18:05:54+03:00

The course of action that would be used to achieve this goal would be

Buying $65 billion of government bonds

<h3>How to solve for the solution</h3>

Given that the feds are wanting to stimulate the economy, there is going to be a right shift in the aggregate demand.

There would be an increase in money supply given that the feds are going to buy bonds.

<h3>The money multiplier</h3>

1/0.1= 10

<h3>Change in reserve</h3>

= $650 billion/10= $65 billion

Hence we conclude that the way of achieving the goal would be by Buying $65 billion of government bonds

Read more on money multiplier here; brainly.com/question/4412587

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