Try Another Version of These Questions

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 increases discount rate.

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

 

Hint


Question 3

Consider the following balance sheet for Wells Fargo.

AssetsLiabilities
Reserves975Deposits2500
Loans1525

Suppose that someone deposited $100 at Wells Fargo.

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

Hint