$\begin{array}{|l|r|}
\hline{\text { Item }} &{\text { Amount }} \
\hline \text { Cash held by public } & \$ 100 \text { billion } \
\hline \text { Transactions deposits } & \$ 300 \text { billion } \
\hline \text { Required reserves } & \$ 30 \text { billion } \
\hline \text { Excess reserves } & \$ 0 \text { billion } \
\hline \text { U.S. bonds held by public } & \$ 475 \text { billion } \
\hline
\end{array}$
Table 14.2
Monetary Aggregates of the U.S. Financial System Assume an original balance sheet: If the Fed changes the required reserve ratio in Table 14.2 to 15 percent,the lending capacity of the system will eventually

Question

Quizplus · Accepted Answer

The required reserve ratio increase from 10% (30/300) to 15% reduces the lending capacity by $100 billion, as banks must hold more reserves and can lend less.

Table 142 Monetary Aggregates of the U

Table 142
Monetary Aggregates of the U