Suppose that the required reserve ratio is 0.12

3. Suppose that the required reserve ratio is 0.12 for deposits and there are no excess reserves. Suppose alsothat the total demand for currency is equal to 0.3 times deposits.a. If total reserves are $40 billion, what is the level of the money supply?b. By how much does the money supply change if the Fed increases the required reserve ratio to 0.20? Assume thattotal reserves are unchanged at $40 billion.

 

Looking for a Similar Assignment? Let us take care of your classwork while you enjoy your free time! All papers are written from scratch and are 100% Original. Try us today! Use Code FREE15