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If the reserve requirement ratio is 15 percent, and banks do not hold excess reserves, and people hold only deposits and no currency, then when the Fed sells $65 million of bonds to the public, bank reserves ___1. decrease by $65 million and the money supply eventually decreases by $433.33 million2. increase by $65 million and the money supply eventually increases by $433.33 million3.decrease by $65 million and the money supply eventually decreases by $266.67 million.4. increase by $65 million and the money supply eventually increases by $266.67 million.
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