Suppose the Federal Reserve decided to sell $20 billion worth of government securities in the open market a By how much will M1 change initially if the entire $20 billion is withdrawn from transactions accounts? Note XM1 decreases be sure to include a negative sign (-) in front of your answer billion M1 will initially change by How will the lending capacity of the banking system be affected if the reserve requirement is 5 percent? Note: It londing capacity decreases be sure to include a negative sign() in front of your answer Total lending capacity will change by billion c How will banks induce investors to respond to this change in lending capacity? if the money supply increases, interest rates will and investors will want to borrow more funds If the money supply decreases interest rates will and investors will want to borrow fewer funds 6 Answer is complete but not entirely correct. 5 points Suppose the Federal Reserve decided to sell $20 bin worth of government secunties in the open market a By how much will M1 change initially d the entire $20 billions withdrawn from transactions accounts? Motor Mt decreases be sure to include a negativo sign () in front of your answer 20bbon M1 will initially change by b. How will the fending capacity of the banking system be affected if the reserve requirement is 5 percent? Note Wrending capacity decreases be sure to include a negative sign() in front of your answer 400 billion Total londing capacity will change by How wil banks induce investors to respond to this change in tending capacity? If the money supply increases inforest rates will decrease and investors will want to borrow more funds increase If the money supply decreases, interest rates will and investors will want to borrow fewer funds