ABBIX has a complex finacial system with the follwoing relationships: The ratio

Question

ABBIX has a complex finacial system with the follwoing relationships: The ratio of required reserves to total deposits is 15%, and the ratio of noncheckable deposits to chekable deposits is 40%.  In addition, currency held by the nonbank public amounts to 20% of checkable deposits.  The rotio of governemnt deposits to checkable deposits is 8%.  Initial excess reserves are $900 million.  

*  Assume that ABBIX has a target M1 mone3y supply of $2.8 billion.  The only variable that you have direct control over is the required reserves ratio.  What would the required reserves tatio have to be to reach the target M1 money supply amount?  Assume the other original ration releationships hole.  

*  Now assume the currency held by the nonbank public drops to 15% of checkable deposits and that ABBIX's target money supply is changed to $3.0 billion.  What would the required reserves tario have to be to reach the new target M1 money supply amount?  Assume the other original ratio relationships hold.

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