Developments affect the u.s. monetary base

Reference no: EM13720158

How would each of the following developments affect the U.S. monetary base, money multiplier, andmoney supply? Explain.a. The Federal Open Market Committee decides to purchase $40 billion of mortgage-backed securitiesevery month (like the third round of "quantitative easing" purchases initiated in 2012).b. A financial crisis prompts households to sell off some of their stock market portfolio and depositthe proceeds into bank accounts covered by deposit insurance.c. Higher expected inflation makes both households and banks less willing to hold cash.d. Banks decide to hold more excess reserves.

Reference no: EM13720158

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