Assume no change in currency holdings as deposits change. A banking system with target reserve ratio is 0.05 starts with no excess reserves. If the central bank purchases $200 in government bonds from commercial banks, what will be the ultimate change in money supply (when banks return to having no excess reserves)? (Round to two decimal places and do not enter the currency symbol. If your answer is $6.114, enter 6.11. If your answer is $6.115, enter 6.12. If appropriate, remember to enter the - sign.)

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Assume no change in currency holdings as deposits change. A banking system
with target reserve ratio is 0.05 starts with no excess reserves. If the central
bank purchases $200 in government bonds from commercial banks, what will be
the ultimate change in money supply (when banks return to having no excess
reserves)?
(Round to two decimal places and do not enter the currency symbol. If your
answer is $6.114, enter 6.11. If your answer is $6.115, enter 6.12. If appropriate,
remember to enter the sign.)
-
Transcribed Image Text:Assume no change in currency holdings as deposits change. A banking system with target reserve ratio is 0.05 starts with no excess reserves. If the central bank purchases $200 in government bonds from commercial banks, what will be the ultimate change in money supply (when banks return to having no excess reserves)? (Round to two decimal places and do not enter the currency symbol. If your answer is $6.114, enter 6.11. If your answer is $6.115, enter 6.12. If appropriate, remember to enter the sign.) -
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