The document discusses the Federal Reserve's increase of $47 billion in deposits at financial institutions through open market operations. With a reserve requirement of 16%, it seeks to determine the maximum potential impact on total deposits resulting from this action. The focus is on the relationship between reserve requirements and deposit multiplication.

1. Suppose the Federal Reserve increases deposits at financial institutions by $47 billion
through its open market operations. If the reserve requirement for all deposits is 16%,
what is the maximum impact the Fed's actions can have on total deposits?