The next two questions refer to the below information:

A) The trading desk at the Federal Reserve sold $700 million in T-Bills. If the current reserve requirement is 7%, how much will the money supply change in Millions? Please be sure to include the sign if it is relevant.

B) If the reserve requirement were 16%, what would the change in the money supply be (in millions)? Please be sure to include the sign if it is relevant.

Answer rating: 100% (QA)

To calculate the change in the money supply we can use the money multiplier formu... View the full answer