1.Cash Withdrawals and Changes in the Money Supply. If a customer withdrew $1,000 in cash from a bank and the reserve ratio was 0.1, by how much could the supply of money be eventually reduced? 2....

1.Cash Withdrawals and Changes in the Money Supply. If a customer withdrew $1,000 in cash from a bank and the reserve ratio was 0.1, by how much could the supply of money be eventually reduced?

2. Setting the Interest Rate on Reserves. What would be the danger if the Fed set an interest rate on reserves close to the market interest rate on loans? (Related to Application 2 on page 308.)