Q25-3

8 pts Question 25 Suppose that the required reserve ratio is 11%, currency in circulation is $800 billion, the amount of checkable deposits is $920 billion, and excess reserves are $25 billion. c) At the start of the COVID 19 crisis, the Federal Reserve began injecting the banking -ystem with massive amounts of liquidity. Explain what would happen to the economy and money multiplier if large amounts of reserves are held as excess reserves. (2 marks)