Suppose a country, Zeekland, uses a unit of account called the zeek. Its banks have no reserve

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Suppose a country, Zeekland, uses a unit of account called the “zeek.” Its banks have no reserve requirements, but banks always want to hold 3 percent of their total checking deposits as cash, and another 2 percent as accounts with the Zeekland Central Bank. If the central bank buys 50 million zeeks worth of government bonds, by how much will the country’s money supply increase?

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Macroeconomics Principles and Applications

ISBN: 978-1111822354

6th edition

Authors: Robert E. Hall, Marc Lieberman

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