Question: Part 1 (1 point) The Federal Reserve buys $28.00 million in Treasury securities. If the required reserve ratio is 25.00%, and all currency is deposited into the banking system, and banks hold excess reserves of 10%, then the maximum amount the money supply can increase is $ million. (Insert your answer in millions: if you think the answer is $30 million,Show transcribed image textAnswer 1- Introduction Ans Part 1 – $72.8 million Description Total deposits – $28 million Required reserve ratio- 25% Banks hold an excess reserve of 10% Calculation of Money supply in the economy- Money…View the full answerTranscribed image text: Part 1 (1 point) The Federal Reserve buys $28.00 million in Treasury securities. If the required reserve ratio is 25.00%, and all currency is deposited into the banking system, and banks hold excess reserves of 10%, then the maximum amount the money supply can increase is $ million. (Insert your answer in millions: if you think the answer is $30 million, just enter 30. Round your answer to two decimal places.) Part 2 (1 point) The Federal Reserve sells $36.00 million in Treasury securities. If the required reserve ratio is 5.00 %, and all currency is deposited into the banking system, and banks hold excess reserves of 10%, then the maximum amount the money supply can decrease is $ million. (Insert your answer in millions, and round your answer to two decimal places.)
