The U.S. economy is experiencing a recession. In order to smooth the economy the Federal Reserve would like to adjust the interest rate it pays on reserves. If the Fed has a goal of increasing the money supply by $20 billion, what should the change in excess reserves be if the reserve requirement is 12%? Instructions: Enter your answer as a positive number rounded to two decimal places. Excess reserves will need to decrease by $ billion.

The U.S. economy is experiencing a recession. In order to smooth the economy the Federal Reserve would like to adjust the interest rate it pays on reserves. If the Fed has a goal of increasing the money supply by $20 billion, what should the change in excess reserves be if the reserve requirement is 12%? Instructions: Enter your answer as a positive number rounded to two decimal places. Excess reserves will need to decrease by $ billion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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