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Question 1

Suppose the Fed decreases required reserve ratio.

As a result of this policy, what will happen to the money supply?

 

Hint


Question 2

Suppose the Fed sells T-bills.

As a result of this policy, what will happen to the money supply?

 

Hint


Question 3

Consider the following balance sheet for PNC.

AssetsLiabilities
Reserves456Deposits1200
Loans744

Suppose that someone deposited $400 at PNC.

Given this data, what is the maximum amount by which the money supply will increase?

Hint