Explain the dynamics resulting from an open market purchase or sale. Explain when an open market purchase is favorable or when an open market sale is favorable. Specifically, assume the sale or purchase to happen $100 must be printed or retired from circulation when the multiplier is 2. In your explanation discuss and distinguish what happens to money supply, the monetary base, and how the money multiplier works. Be sure to indicate the direction of money flows.
Dynamics resulting from an open market purchase or sale
Sale or purchase to happen $100
Multiplier is 2.
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