Suppose the Federal Reserve sets the reserve requirement at 12 percent, banks hold no excess reserves, and no additional currency is held. Instructions: In part a, round your answer to 2 decimal places. In parts b and c, enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. What is the money multiplier? b. By how much will the total potential money supply change if the Federal Reserve changes the amount of reserves by -$80 million? million c Suppose the Federal Reserve wants to increase the total money supply by $500 million. By how much should the Federal Reserve change reserves to achieve this goal? million

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Suppose the Federal Reserve sets the reserve requirement at 12 percent, banks hold no excess reserves, and no additional currency is
held
Instructions: In part a, round your answer to 2 decimal places. In parts b and c, enter your answers as a whole number. If you are
entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
a. What is the money multiplier?
b. By how much will the total potential money supply change if the Federal Reserve changes the amount of reserves by -$80 million?
%24
million
c. Suppose the Federal Reserve wants to increase the total money supply by $500 million. By how much should the Federal Reserve
change reserves to achieve this goal?
million
Transcribed Image Text:Suppose the Federal Reserve sets the reserve requirement at 12 percent, banks hold no excess reserves, and no additional currency is held Instructions: In part a, round your answer to 2 decimal places. In parts b and c, enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. What is the money multiplier? b. By how much will the total potential money supply change if the Federal Reserve changes the amount of reserves by -$80 million? %24 million c. Suppose the Federal Reserve wants to increase the total money supply by $500 million. By how much should the Federal Reserve change reserves to achieve this goal? million
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