Consider a system of banking in which the Fedenal Reserve uses required reserves to control the money supply (as was the case in the United States before 2008). Assume that banks do not hold excess reserves and that households do not hold ourrency, so the only money exists in the form of demand deposits. To further simplify, assume the banking system has total reserves of $500. Determine the money muttiplier as well as the money supply for each reserve requirement listed in the following table. A lower reserve requirement is associated with a money supply. Suppose the Federat Reserve wants to increase the money supply by $200. Maintain the assumption that banks do not hold excess reserves and that households do not hold currency, If the reserve requirement is 10\%, the Fed will use open-market operations to U.5. oovernment bonds. Now, supbose that, rather than immeflately lendino out all excess reierves, banks begin holding some excess reserves due to uncertain economic conditions. Specifically, banks increace the percentage of deposits held as reserves from 10% to 25%. This increase in the reserve ratio causes the moner multiolie to to Under these conditions, the fed would need to to increase the mosey supply by 5200 . worth of U.S. government bonds in order Which of the following statements help to explain why, in the real world, the Fed cannot precisely control the money supply? Check all that apoly: The Fed cannot contral whather and to what extent banks hold excess reserves. The Fed caninot prevent banks from lending out required reserves. The Fed cannot control the amount of money that househalds choose to hold as currency