Question: 5. In a simplifi ed banking system in which all banks are subject to a 25 percent required reserve ratio, a $1,000 open market sale

5. In a simplifi ed banking system in which all banks are subject to a 25 percent required reserve ratio, a $1,000 open market sale by the Fed would cause the money supply to

a. increase by $1,000.

b. decrease by $1,000.

c. decrease by $4,000.

d. increase by $4,000.

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