Question: Assuming initially that the required reserve ratio = 10%, the currency-deposit ratio = 50%, and the excess reserve ration= 10%, a decrease in the required

Assuming initially that the required reserve ratio = 10%, the currency-deposit ratio = 50%, and the excess reserve ration= 10%, a decrease in the required reserve ratio to 5% causes the M1 money multiplier to _____________, everything else held constant.

Following questions:

What was the initial M1 money multiplier? Round up to three decimal places.
What is the new M1 multiplier?
What happens to the money supply (M1) when the fed decreases the required reserve ratio?

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