8. The reserve requirement, open market operations, and the money supply

Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $500. Determine the money multiplier and the money supply for each reserve requirement listed in the following table.

Reserve Requirement Money Supply (Percent) Simple Money Multiplier (Dollars) 5 5 10 0.5 lower reserve requirement is assoc th a money supply 5 uppose the Federal Reserve wants t ise the money supply by $200. A ouseholds do not hold currency. If t 10 i've requirement is 10%, the Fed overnment bonds. 20Reserve Requirement Money Supply (Percent) Simple Money Multiplier (Dollars) 5 5 T \"I" 10 10 T 7 A lower reserve requirement is asso- h a 1r money supply. Suppose the Federal Reserve wants I se the money supply by $200. Age households do not hold currency. If e requirement is 10%, the Fed w' government bonds. Now, suppose that, rather than imm lending out all excess reserves, ba Reserve Requirement Money Supply (Percent) Simple Money Multiplier (Dollars) 5 5 T 1r 10 10 1r A lower reserve requirement is associated with a supply. Suppose the Federal Reserve wants to increase the money 5 200. Ag wouseholds do not hold currency. If the reserve requirement e Fed vs government bonds. Reserve Requirement Money Supply (Percent) Simple Money Multiplier (Dollars) 5 5 T v 10 10 \"I" 1" A lower reserve requirement is associated with a Suppose the Federal Reserve wants to increase the money 5 households do not hold currency. If the reserve requirement government bonds. Now, suppose that, rather than immediately lending out all =