Base on the following information: Demand deposits Currency in circulation Excess reserves = $950 million = $570 million = $40 million = 12%. Required reserve ratio on demand deposit 1. Calculate the money supply, the excess reserve ratio, the currency ratio, and monetary base. 2. Due to a sharp contraction of the economy, the central bank conducts an open market purchase of bonds held by the financial institutions of $750 million. The financial institutions choose to hold $250 million of the proceeds as excess reserves. What happens to the amount of excess reserves, the excess reserve ratio, the money multiplier, and the money supply?

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