If it wished to increase M2 by $10 billion, how much would it have to raise the monetary base?

Suppose the Federal Reserve uses data to estimate the currency-deposit ratio to
be 0.90, the ratio of liquid savings assets to transaction deposits to be 8.00, and
the excess reserves ratio to be 0.001.
A) If it wished to increase M2 by $10 billion, how much would it have to raise
the monetary base?

 

B) How far off would the Federal Reserve have been if it conducted policy as
you describe in (a), but the currency-deposit ratio turned out to be 1?

 

C) How far off would the Federal Reserve have been if it conducted policy as
you describe in (a), but the liquid asset to transaction deposits ratio turned out
to be 10?

 

D) How far off would the Federal Reserve have been if it conducted policy as
you describe in (a), but the excess reserves ratio turned out to be 0.003?