2. How the Fed affects the monetary base The reserve requirement is the amount of funds that banks must hold in reserves against specific deposit accounts. The dollar amount of a bank's reserve requirement is based on the amount of a bank's net total transaction accounts. Since 1982, the first few million dollars of net transaction accounts have constituted an exemption amount, an amount exempt from the reserve requirement, with the exemption amount starting off at $2 million in 1982 and reaching $13.2 million in 2014. The amount of net transaction accounts is subject to a 3% required reserve ratio. This low- reserve tranche is adjusted each year. In 1980, it was $89.0 million and it reached $25 million in 2014. Net transaction account amounts over the low-reserve tranche level are subject to a 10% required reserve ratio. and the Suppose that the level of exemption amount increased. Then, ceteris paribus, the amount of required reserves will decrease monetary base will decrease w and the Suppose now that the low-reserve tranche increased. Then, ceteris paribus, the amount of required reserves will increase monetary base will not change