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Economics
MEDIUM
ENGLISH
Economics
Suppose the central bank purchases a government bond from a person who deposits the entire amount received from the sale in her bank the money supply will ?
rise by an amount that depends on the bank’s reserve ratio
Correct answer
B
rise by less than the amount of the deposit
Option B
C
fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio
Option C
D
fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio
Option D
Correct answer: A
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