I am having troubles understanding parts B & D. Not sure what formula(s) to use. Please double check answers. I have posted this twice and answers have been incorrect, I am not sure why though. Suppose the Fed decided to sell $100 billion worth of government securities in the open market. Assume all payments are directlydeposited into or withdrawn from the banking system. What impact would this action have on the economy? Specifically, answer thefollowing questions.Instructions: Enter your responses as a whole number. If the lending capacity or aggregate demand falls be sure to include a negativesign (-) with your answer.a. How will M1 be affected initially?O Not enough information to answerO No initial change to M1Increase by $100 billionDecrease by $100 billion Ob. By how much will the banking system's lending capacity change if the reserve requirement is 10 percent?$ 400billionc. How must interest rates change to induce investors to utilize this change in lending capacity?Interest rates must rised. By how much will aggregate demand initially change if investors change their behavior because of this change in available credit?%24400 O billion

(B) Total increase in reserves with banks = $100 billion Reserve requirement = 10% or 0.10 Required…

tions: Enter your responses as a whole number. if the lending capacity or aggregate demand falls be sure to in with your answer. will M1 be affected initially? Not enough information to answer No initial change to M1 Increase by $100 billion Decrease by $100 billion o ow much will the banking system's lending capacity change if the reserve requirement is 10 percent? 400 O billion must interest rates change to induce investors to utilize this change in lending capacity?

tions: Enter your responses as a whole number. if the lending capacity or aggregate demand falls be sure to in with your answer. will M1 be affected initially? Not enough information to answer No initial change to M1 Increase by $100 billion Decrease by $100 billion o ow much will the banking system's lending capacity change if the reserve requirement is 10 percent? 400 O billion must interest rates change to induce investors to utilize this change in lending capacity?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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