2011, Question 3 · 6 points
Sewell Bank and a Fed bond purchase
Compute a bank's required reserve ratio from its balance sheet, find the immediate changes after the Fed buys bonds from it, calculate the largest possible money supply change, explain the bond price effect, and say how a cash deposit affects M1 right away.
This exam had three free-response questions with 50 minutes of writing time after a 10 minute planning period, with a suggestion to spend about half the time on Question 1 and split the rest evenly between Questions 2 and 3. The current exam has 3 free-response questions in 60 minutes. The skills these questions practice still count.
Lessons this question draws on
1 Read the question
The question is College Board's, from the 2011 exam. It starts on page 3 of the PDF. College Board no longer posts this exam, so it opens from the copy of College Board's PDF that the Internet Archive saved on May 20, 2025.
2 Write your answer
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Scoring guidelines (PDF, page 6) What the exam readers saw (Student Performance Q&A)
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