Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requirement in place: Balance Sheet for Ecoville International Bank ASSETS LIABILITIES Cash $33,000 Demand Deposits $99,000 Loans 66,000 Now assume that the Fed lowers the reserve requirement to 8%. If the Fed wanted to implement a contractionary monetary policy using reserve requirements, how would that work?

Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requirement in place: Balance Sheet for Ecoville International Bank ASSETS LIABILITIES Cash $33,000...

Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requirement in place:

Balance Sheet for Ecoville International Bank
ASSETS	LIABILITIES
Cash	$33,000	Demand Deposits	$99,000
Loans	66,000

Now assume that the Fed lowers the reserve requirement to 8%.

If the Fed wanted to implement a contractionary monetary policy using reserve requirements, how would that work?

Jun 07, 2022