Question: Problem 12. (5pt) (a) Consider a bank policy to maintain 24% of deposits as reserves. The bank currently has $20 million in deposits and holds

Problem 12. (5pt) (a) Consider a bank policy to maintain 24%

Problem 12. (5pt) (a) Consider a bank policy to maintain 24% of deposits as reserves. The bank currently has $20 million in deposits and holds $800,000 in excess reserves. What is the required reserve on a new deposit of %100,000? (b) The federal reserve wants to increase the supply of reserves, so it purchases $3 million worth of bonds from the primary dealers. Show the effect of this open market operation using T-accounts

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