The U.S. economy is experiencing a recession. In order to smooth the economy the Federal Reserve would like to adjust the interest rate it pays on reserves. If the Fed has a goal of increasing the money supply by $20 billion, what should the change in excess reserves be if the reserve requirement is 12%? Instructions: Enter your answer as a positive number rounded to two decimal places. Excess reserves will need to decrease by $ billion.

Brief Principles of Macroeconomics (MindTap Course List)
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Author:N. Gregory Mankiw
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Chapter11: The Monetary System
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The U.S. economy is experiencing a recession. In order to smooth the economy the Federal Reserve would like to adjust the interest
rate it pays on reserves. If the Fed has a goal of increasing the money supply by $20 billion, what should the change in excess
reserves be if the reserve requirement is 12%?
Instructions: Enter your answer as a positive number rounded to two decimal places.
Excess reserves will need to decrease
by $
billion.
Transcribed Image Text:Return to question 4 The U.S. economy is experiencing a recession. In order to smooth the economy the Federal Reserve would like to adjust the interest rate it pays on reserves. If the Fed has a goal of increasing the money supply by $20 billion, what should the change in excess reserves be if the reserve requirement is 12%? Instructions: Enter your answer as a positive number rounded to two decimal places. Excess reserves will need to decrease by $ billion.
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