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Author Question: Assume there is no leakage from the banking system and that all commercial banks are loaned up. The ... (Read 109 times)

BRWH

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Question 1

Assume there is no leakage from the banking system and that all commercial banks are loaned up. The required reserve ratio is 25%. If the Fed sells $5 million worth of government securities to the public, the change in the money supply will be


◦ $100 million.
◦ $25 million.
◦ -$5 million.
◦ -$20 million.

Question 2

Assume there is no leakage from the banking system and that all commercial banks are loaned up. The required reserve ratio is 12.5%. If the Fed buys $20 million worth of government securities from the public, the change in the money supply will be


◦ $20 million.
◦ $125 million.
◦ $160 million.
◦ $250 million.


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Marked as best answer by BRWH on Apr 19, 2019

parshano

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