Question

Suppose the required reserve ratio is 6.5%, the banking system has $1,950 in total
reserves, and is loaned-up. The deposits in the banking system must be

	$30,000
	$63
	$22,500
	$127

part2:

Which of the following is consistent with expansionary monetary policy?

	an open market sale of government bonds
	increasing the discount rate
	increasing the reserve requirement
	an open market purchase of government bonds

Answer 1

deposits in the banking system=reserves /required reserve ratio=1950/0.065

=30000

The amount is $30000

Option 1

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Option 4

expansionary monetary policy is used to eliminate the recessionary gap or stimulate the slowing economy. expansionary monetary policy increases the money supply to do so and it can be increased by

an open market sale of government decreases the money supply

bonds increasing the discount rate decreases the money supply and decrease in discount rate increases it

increasing the reserve requirement decreases the money supply and a decrease in reserve requirement rate increases it

an open market purchase of government bonds increases the money supply.