What is the maximum impact the Fed actions can have

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Problem - Suppose the Federal Reserve increases deposits at financial institutions by $50 billion through its open market operations. If the reserve requirement for all deposits is 8%, what is the maximum impact the Fed's actions can have on total deposits?

a. $575 billion increase

b. $54.3 billion increase

c. $625 billion increase

d. An increase greater than $1 trillion

e. Total deposits would decrease, but there is not enough information to compute the amount.

Reference no: EM132840145

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