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ASo 3. The central bank holds $1,400 in government securities. The commercial banks have deposited $300 with the central bank and hold $100 in vault cash. $700 are held as currency by the public. The required reserve ratio is 20%. Banks are loaned up. (a) Fill the central bank's T-account below. Assets Liabilities Gov't securities $ 1 You Reserves 20 401 Currency in circulation (This is not a complete T-account. The two sides may not be equal.) (b) What is the money supply? 700+ 400 X - 2700 (c) The central bank would like to change the money supply to $2,300 either by an open market operation or a change in the required reserve ratio. (i) What should be the new ratio if the required reserve ratio is changed? 700 + 400 x - R = 2300 R = 250/8 (ii) How much government securities should be purchased/sold if an open market operation is undertaken