Bank A's total reserve (R) changed by $56,800,000 when the Fed purchased bonds from bank A. Required reserve ratio for the banking system is set at 4.6%, (0.046). a. How much of the change in total reserve can bank A lend out? In other words, what is bank A's excess reserve after the Fed's purchased bonds from it? $ b. By how much will total money supply change if bank A, and all subsequent banks, are able to lend out their entire excess reserves as the result of the initial change in reserve equal to $56,800,000 in bank A? $

Bank A's total reserve (R) changed by $56,800,000 when the Fed purchased bonds from bank A. Required reserve ratio for the banking system is set at 4.6%, (0.046). a. How much of the change in total reserve can bank A lend out? In other words, what is bank A's excess reserve after the Fed's purchased bonds from it? $ b. By how much will total money supply change if bank A, and all subsequent banks, are able to lend out their entire excess reserves as the result of the initial change in reserve equal to $56,800,000 in bank A? $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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