1. 4)Total Reserves $80,000,000; Reserve Requirement 5%; Total Deposits $700,000,000. What is the level of excess reserves?
2. 5)The Fed changes reserve requirements from 10% to 7%, thereby creating $900 M in excess reserves. What was the initial amount of deposits in the banking system?
3. 6)Assume the Fed pays $1000 for a government bond on the open market. With a 5% reserve requirement, what is the theoretical ultimate addition to the money supply, and why?