of Tazi is controlled by the country's central bank known as the Bank of Tazi. The zian dollar. Aggregate banking statistics show that collectively the banks of Tazi hc eserves, $75 million of excess reserves, have issued $7,500 million of deposits, and easury bonds. Tazians prefer to use only demand deposits and so all money is on dep 29-1. Suppose that the Bank of Tazi changes the reserve requirement to 3 percent. Assa want to hold the same percentage of excess reserves what is the value of the money sup change in the reserve requirement? on ion

Macroeconomics: Private and Public Choice (MindTap Course List)
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Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
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Chapter13: Money And The Banking System
Section: Chapter Questions
Problem 16CQ
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Scenario 29-1
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit
of currency is the Tazian dollar. Aggregate banking statistics show that collectively the banks of Tazi hold $300
million of required reserves, $75 million of excess reserves, have issued $7,500 million of deposits, and hold $225
million of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the
bank.
Refer to Scenario 29-1. Suppose that the Bank of Tazi changes the reserve requirement to 3 percent. Assuming
that the banks still want to hold the same percentage of excess reserves what is the value of the money supply after
banks'adjust to the change in the reserve requirement?
O $9,375 million
O S12,500 million
O S7,500 million
O S10,000 million
Transcribed Image Text:Scenario 29-1 The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the Tazian dollar. Aggregate banking statistics show that collectively the banks of Tazi hold $300 million of required reserves, $75 million of excess reserves, have issued $7,500 million of deposits, and hold $225 million of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all money is on deposit at the bank. Refer to Scenario 29-1. Suppose that the Bank of Tazi changes the reserve requirement to 3 percent. Assuming that the banks still want to hold the same percentage of excess reserves what is the value of the money supply after banks'adjust to the change in the reserve requirement? O $9,375 million O S12,500 million O S7,500 million O S10,000 million
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