Question

Suppose the Fed wants to increase the money supply by $400 billion to drive down interest rates and stimulate the economy. Assuming that the money multiplier is operating to full effect, to accomplish the desired increase, the Fed could

Answer 1

The correct answer is "The Fed could buy $40 billions of US securities from banks"

Step-by-step explanation:

The Fed could buy $40 billions of US securities from banks

$400 Billion * 10% rate = $40 Billions