1-Assume that banks lend out all their excess reserves. Currently, the legal reserves that banks must hold equal 11.5 billion$. If the Federal Reserve decreases its reserve requirement from 10% to 5%, then there is potential for the whole banking system to raise money supply by:
a- 11.5 billion$
b- 230 billion$
c- 115 billion$
d- 57.5 billion$
e- 575 billion$
2-If a bond pays a fixed return of 500$ a year and the current interest rate has risen from 5% to 10%, then the bond price must have:
a- risen from 25$ to 50$
b- fallen from 50$ to 25$
c- risen from 5,000$ to 10,000$
d- fallen from 10,000$ to 5,000$
e- risen from 1,000$ to 5,000$