If the money multiplier is 3 and the Fed wants to increase the money supply by $900,000, it could 18. A. Buy $300,000 worth of bonds. B. Buy $225,000 worth of bonds. C. Sell $300,000 worth of bonds. D. Sell $225,000 worth of bonds.

The right solution is Option A "buys $300000 worth rupees bonds".

Explanation:

Given:

Money multiplier,

= 3

Change in money supply,

= $900000

As we know,

⇒

Or,

⇒

On putting the values, we get

⇒                                                    

⇒                                                     ($)

rational decision making is a multi-step process for making choices between alternatives. the process of rational decision making favors logic, objectivity, and analysis over subjectivity and insight. the word “rational” in this context does not mean sane or clear-headed as it does in the colloquial sense.

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