Check my work Suppose the Fed decides it needs to pursue an expansionary policy. Assume people hold no cash, the reserve requirement is 20 percent, and there are no excess reserves. Show how the Fed would increase the money supply by $3 million through open market operations. 56 ints Instructions: Enter numeric responses as whole numbers. eBook Because the current money multiplier is the Fed would ( buy D $ worth of bonds, increasing the monetary base and so increasing the money supply by Print $3 million. References