(Answered) Total reserves in the banking system is 120 billion none of

Economics

Total reserves in the banking system is $120 billion none of which are excess. People hold only deposits and no currency, and the reserve requirement is 8%. If the Fed reduces the reserve requirement to 6% and at the same time sells $35 billion worth of bonds, then by how much does the money supply change?

Decreases by 13%
Decreases by 27%
Increases by 13%
Increases by 27%

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