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Macro$-$ Reserves and Monetary Policy

So what is our M$1$ money supply?

Economia

Brandon Lee

Bank Balan

Geoffrey

Balance She

Yes! With deposits of $$250$ million and

Assets

cash held by the public of $$20$ million, the M$1$ supply is $$270$ million.

Required R

Excess Res

Government

My team of economists estimates that, for prices and employment to be at ideal levels, we would instead want the M$1$ money supply to total $$276$ million.

What course of action should we take to make this so$?$

We should do contractionary $($tight$)$ money policy, selling bonds to banks.

We should do expansionary $($easy$)$ money policy, buying bonds from banks.

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