a. At a reserve requirement of 15%, what is the value of the money multiplier? _____ b. If the reserve requirement is 15% and the Fed increases reserves by $30 billion, what is the total increase in the money supply? ____ c. Suppose the Fed raises the reserve requirement to 18%. What is the value of the money multiplier now? ____
Suppose the reserve requirement is initially set at 15%.
Instructions: In parts a and c, round your answers to two decimal places. In parts b and d, round your answers to one decimal place.
a. At a reserve requirement of 15%, what is the value of the money multiplier?
_____
b. If the reserve requirement is 15% and the Fed increases reserves by $30 billion, what is the total increase in the money supply?
____
c. Suppose the Fed raises the reserve requirement to 18%. What is the value of the money multiplier now?
____
d. Assume the reserve requirement is 18%. If the Fed increases reserves by $30 billion, what is the total increase in the money supply?
____
e. Raising the reserve requirement from 15% to 18% ________ (increase or decrease) the money multiplier and ________ (decrease or increase) the money supply.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
