Assume that the reserve requirement is 20 percent. also assume that banks do not hold excess reserves and there is no cash held by the public. the federal reserve decides that it wants to expand the money supply by $ 40 million dollars.
a. if the fed is using open? market operations, will it buy or sell bonds?
b. what quantity of bonds does the fed need to buy or sell to accomplish the goal? explain your reasoning.

Afirm wants to strengthen its financial position. which of the following actions would increase its current ratio? a. reduce the company's days' sales outstanding to the industry average and use the resulting cash savings to purchase plant and equipment. b. use cash to repurchase some of the company's own stock. c. borrow using short-term debt and use the proceeds to repay debt that has a maturity of more than one year. d. issue new stock, then use some of the proceeds to purchase additional inventory and hold the remainder as cash. e. use cash to increase inventory holdings.