1. If excess reserves are zero and theBSP increases the required reserve ratiofrom 5 percent to 10 percent, then themoney multiplier (increases, decreases)from _ to and money supply(increases, decreases)the required reserve ratio is 8 percent,commercial banks do not hold excess2. Ifreserves, and people do not hold currency,then when the Central Bank purchases$20 million of government bonds, bankreserves of commercial banks (increase,and thedecreasebymoney supply eventually (increases,by L. 3. If thereserve ratio is 15 percent, and comme;c:albanks do not hold excess reserves, an,people hold only demand deposits and ro,currency, then when the Central Bank sells$65 million worth of bonds to the public,commercial bank reserves (increase,and the moneydecreases)decrease)bysupply eventually (increases, decreases)4. A decrease in thediscount rate will (increase, decrease)commercial bank borrowings fromthe central bank, (increase, decrease)commercial bank reserves, andthe moneyby(increase, decrease)supply.

The required reserve ratio is the fraction of deposits that the Fed requires banks to hold as…

Answered: BSP increases the required reserve…

BSP increases the required reserve ratio rom 5 percent to 10 percent, then the noney multiplier (increases, decreases) from _ to and money supp increases, decreases) 2. If

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: The Monetary System

Section: Chapter Questions

Problem 2PA

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Question

1. If excess reserves are zero and the
BSP increases the required reserve ratio
from 5 percent to 10 percent, then the
money multiplier (increases, decreases)
from _ to and money supply
(increases, decreases)
the required reserve ratio is 8 percent,
commercial banks do not hold excess
2. If
reserves, and people do not hold currency,
then when the Central Bank purchases
$20 million of government bonds, bank
reserves of commercial banks (increase,
and the
decrease
by
money supply eventually (increases,
by L. 3. If the
reserve ratio is 15 percent, and comme;c:al
banks do not hold excess reserves, an,
people hold only demand deposits and ro,
currency, then when the Central Bank sells
$65 million worth of bonds to the public,
commercial bank reserves (increase,
and the money
decreases)
decrease)
by
supply eventually (increases, decreases)
4. A decrease in the
discount rate will (increase, decrease)
commercial bank borrowings from
the central bank, (increase, decrease)
commercial bank reserves, and
the money
by
(increase, decrease)
supply.

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