Lumen OHM Assessment

Suppose that the required reserve ratio (R) is `20` percent and that banks do not hold any excess reserves.

What is money multiplier, given this situation?

Suppose that the Fed conducts a `$430` million open market purchase of government bonds.

In addition, suppose that the required reserve ratio is `31` percent and that banks do not hold any excess reserves.

What is the effect on the money supply? More precisely, by how much will the money supply increase?

Suppose that the Fed sell `$370` million of government bonds.

In addition, suppose that the required reserve ratio (R) is `43` percent and that banks do not hold any excess reserves.

What is money multiplier?

Suppose that the Fed sells `$460` million of government bonds.

In addition, suppose that the required reserve ratio is `27` percent and that banks do not hold any excess reserves.

What is the effect on the money supply? More precisely, by how much will the money supply change?

Assume that the banking system has total reserves of `$300` billion.

Assume also that required reserves are `20` percent and that banks do not hold any excess reserves and households hold no currency.

What is the size of the M1 money supply?

Assume that the banking system has total reserves of `$682` billion.

Assume also that required reserves are `31` percent and that banks do not hold any excess reserves and households hold no currency.

Now suppose that the Fed decreased the required reserves to `24.8`.

What is the new multiplier?

Assume that the banking system has total reserves of `$540` billion.

Assume also that required reserves are `45` percent and that banks do not hold any excess reserves and households hold no currency.

Now suppose that the Fed decreases the required reserves to `36`.

What is the level of excess reserves? Make sure to include a negative sign if necessary.

Assume that the banking system has total reserves of `$693` billion.

Assume also that required reserves are `33` percent and that banks do not hold any excess reserves and households hold no currency.

Now suppose that the Fed decreased the required reserves to `26.4`.

As a result of this new policy, by how much has the money supply increased?

Assume also that required reserves are `16` percent and that banks do not hold any excess reserves and households hold no currency.

What is the level of deposits?

Assume that the banking system has total reserves of `$198` billion.

Assume also that required reserves are 9 percent and that banks do not hold any excess reserves and households hold no currency.

Now suppose that the Fed increased the required reserves to `10.8`.

What is the new multiplier?

Assume that the banking system has total reserves of `$559` billion.

Assume also that required reserves are `43` percent and that banks do not hold any excess reserves and households hold no currency.

Now suppose that the Fed increased the required reserves to `51.6`.

What is the level of excess reserves? Make sure to include a negative sign if necessary.

Assume that the banking system has total reserves of `$552` billion.

Assume also that required reserves are `23` percent and that banks do not hold any excess reserves and households hold no currency.

Now suppose that the Fed increased the required reserves to `27.6`.

As a result of this new policy, by how much has the money supply changed?