Suppose the Federal Reserve System has a required reserve ratio of 0.20.If the Open Market Committee sells $10 billion of securities to the commercial banking system,then before the money multiplier takes effect,initially excess reserves

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When the Open Market Committee sells $10 billion of securities to the commercial banking system, the commercial banks have to pay for these securities, which decreases their reserves. Since the required reserve ratio is 0.20, this means that for every $1 of deposits, the banks need to hold $0.20 in reserves. Therefore, a decrease of $10 billion in reserves would lead to a decrease in deposits of $50 billion (10 billion divided by 0.20). This means that excess reserves initially decrease by $10 billion.

Suppose the Federal Reserve System Has a Required Reserve Ratio