(a). The required reserve ratio is 10%. If the Fed increases the amount of excess reserves in the banking system by $100,000,000, the maximum potential amount of additional money created in the economy will be dollars. -- - (b). The required reserve ratio is 10%, but due to economic uncertainty, banks are holding an additional 2.5% of their deposits as excess reserves. If the Fed increases the amount of excess reserves in the banking system by $100,000,000 through an open market purchase, the maximum potential amount of additional money created in the economy will be dollars.

(a). The required reserve ratio is 10%. If the Fed increases the amount of excess reserves in the banking system by $100,000,000, the maximum potential amount of additional money created in the economy will be dollars. -- - (b). The required reserve ratio is 10%, but due to economic uncertainty, banks are holding an additional 2.5% of their deposits as excess reserves. If the Fed increases the amount of excess reserves in the banking system by $100,000,000 through an open market purchase, the maximum potential amount of additional money created in the economy will be dollars.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter25: Money, Banking, And The Federal Reserve System

Section: Chapter Questions

Problem 13P

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