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(5) Suppose that the reserve requirement for checking deposits is 10 percent and that banks do not hold any excess reserves. a. If the Fed

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(5) Suppose that the reserve requirement for checking deposits is 10 percent and that banks do not hold any excess reserves. a. If the Fed sells $10,000 of government bonds, what is the effect on the economy's reserves and money supply? b. Now suppose the Fed lowers the reserve requirement to 5%, but banks choose to hold another 5% of deposits as excess reserves. Why might banks do so? 0. What is the overall change in the money multiplier and the money supply as a result of these actions

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