Answer the questions on the money multiplier based on the fo…
Answer the questions on the money multiplier based on the following information: Suppose that the required reserve ratio is 10%, currency in circulation is $600 billion, the amount of checkable deposits is $950 billion, and excess reserves is $20 billion. a) The money supply is ____________ billion. b) The currency deposit ratio is _____________. c) The excess reserves ratio is ____________. d) The money multiplier is ____________. e) Suppose the central bank conducts a large open market purchase of bonds held by banks in the amount of $1,400 billion. Assuming the previous ratios calculated are the same, the money supply should _______________ to $_________________ billion. f) Briefly explain what would happen to the money supply if the banks chose to hold these proceeds in excess reserves rather than loan them out.