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Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 11 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the money multiplier" is given by 1/ (RR+ ER), where RR the percentage of deposits that banks are required to keep as reserves ER the percentage of deposits that banks voluntarily hold as excess reserves Consider the balance sheet of one of several identical banks: Assets Liabilities and Net Worth Reserves 600 Checking Deposits 2,400 Net Worth 3,000 ,000 Total Assets ,000 Liabilities and Net Worth The required reserve ratio in this economy is-%. Enter your response as an integer) e the Fed commits itself to the use of the Taylor rule (shown below) to set the federal funds rate. Long-run target+ 1.5(Inflation rate Federal funds rate L -Inflation target)+0.5(Output gap) Suppose the Fed has set the long-run target for the federal funds rate at 1.5 percent and its target for inflation at 2 percent. f the economy is currently hitting the Feds inflation target and GDP exactly equals the trend GDP, then the Fed will set the federal funds rate atpercent (Enter your response with no rounding ) Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 11 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the money multiplier" is given by 1/ (RR+ ER), where RR the percentage of deposits that banks are required to keep as reserves ER the percentage of deposits that banks voluntarily hold as excess reserves Consider the balance sheet of one of several identical banks: Assets Liabilities and Net Worth Reserves 600 Checking Deposits 2,400 Net Worth 3,000 ,000 Total Assets ,000 Liabilities and Net Worth The required reserve ratio in this economy is-%. Enter your response as an integer) e the Fed commits itself to the use of the Taylor rule (shown below) to set the federal funds rate. Long-run target+ 1.5(Inflation rate Federal funds rate L -Inflation target)+0.5(Output gap) Suppose the Fed has set the long-run target for the federal funds rate at 1.5 percent and its target for inflation at 2 percent. f the economy is currently hitting the Feds inflation target and GDP exactly equals the trend GDP, then the Fed will set the federal funds rate atpercent (Enter your response with no rounding )