c.Checking deposits. Answer Required reserves = Required reserves ratio×Checking deposits $1,400 = 0.10×Checking deposits Checking deposits = $14,000 d.Currency. Answer Currency = Currency-to-deposit ratio×Checking deposits Currency = 0.25×$14,000 Currency = $3,500 e. M1. Answer M1 = Currency + Checking deposits M1 = 3,500 + $14,000 M1 = $17,500 12.The Money Multiplier: Suppose the currency-to-deposit ratio is 0.20, the excess reserves-to-deposit ratio is 0.10, and the required reserves ratio is 0.10. a.If the Federal Reserve buys $6 million in bonds, how much does the money supply change?
b.If the Federal Reserve wants the money supply to decline by $27 million, how much should it decrease the monetary base?