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Consider a system of banking in which the Federal Reserve uses required reserves to control the money supply (as was the case in the United States before 2008). Assume that banks do not hold excess reserves and that houscholds do not hold currency, so the only money exists in the form of dematid deposits. To further simplify, assume the banking system has total reserves of $500. Determine the money multiplier as well as the money supply for eoch reserve requirement listed in the following table. A lower reserve requirement is associated with a money supply, Suppose the federal Reserve wants to increase the money supply by 5200 . Maintain the assumption that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%, the Fed will use open-market operations to gowemment bonds. Wes, banks begin holding some excess reserves due to uncertain economic money multipiler to to Under these conditions, the Fed would need to increase the money supply by $200. Which of the following statements help to explain why, in the real.world, the Fed cannot precisely control the money supply? Check all that opply. The Fed connot control the amount of money that households choose to hold as currency. The Fed cannot prevent banks from lending out required reserves: The Fed cannot control whether and to what extent banks hold excess reserves

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