Question: Please help with question E. All others are correct Assume that the following data describe the current condition of the commercial banking system: Total reserves:

Please help with question "E". All others are correct

Please help with question "E". All others are correct Assume that the

Assume that the following data describe the current condition of the commercial banking system: Total reserves: Transactions deposits: Cash held by public: Required reserve ratio: Value $35 billion $650 bilion $250 bilion 0.05 a. How large is the money supply (M1)? 900 bilion $ billion in excess 2.51 reserves b. Are the banks fully utilizing their lending capacity? Banks currently have Now assume that the public deposited another S15 billion in cash in transactions accounts. 6. What would happen to the money supply initially (before any lending takes place? Assuming the $15 billion in cash is not new money in the system, M1 will d. How much would the total lending capacity of the banking system be after this portfolio switch? not change $ 335 bilion e. How large would the money supply be if the banks fully utilized their lending capacity? bilion f. What three steps could the Fed take to offset the potential growth in M1? Increase Increase Sell reserve requirements the discount rate bonds

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