11 The table below is the current balance sheet for the Maple Leafs Bank. Answer the following questions assuming that the bank's target reserve ratio is 10%. Liabilities 1 Equity mm ln mm 33 _ ewe l_l_ same l_l_ I_I_ I_I_ _I_I_I_I a.ThIs bank is [Click to select} v by$ b. Suppose that a loan, in the amount of the excess reserves found in part {a}, is made to Sats Mundin. Show the resulting balance sheet in columns {1} In the table above. c. Suppose that Sats immediately speids all of "IIS loan by writing a cheque to his psychologist, Freda Freud. She deposits it in her account, which happens to also be at the Maple Leafs Bank. The bank is now {Click to select) v by $ d. Suppose, instead, that the bank makes a loan for the amount in your answer in part {a}, which then clears against the Maple Leafs Bank. Show the resulting balance sheet in columns (2} in the table above. E. The Bank HOW has EXCESS [ESEIVES 0 _$ Suppose that there are a total of 9 other banks In the economy and that the balance sheet for the whole banking system is presented In the table below. Assume that each of the other banks also has a target reserve ratio of 10%. (1 all) Liabilities r Equity (1 all) swam n meme .3 2mm - mam - mmm - smmm - f. In the table above, show the balance sheet ofthis banking system when it Is fully loaned up. Use columns ('I all}. g. The Increase in the money supply as a result of all the banks becomIng fully loaned up is S Interest 12 50 100 150 200 250 :Book Quantity of investment b) What is the new equilibrium interest rate in Everton? 1% c) By how much will investment spending in Everton change as a result of the decrease in the money supply? (Click to seled) | of $[ billion d) Suppose that for every $1 change in investment spending, aggregate demand changes by $4. Drew the new AD curve. Flot only the endpoints of the ADz curve in the graph below. 150 Tools 140 ADZ 130 Price level 120 TOO X 90 400 600 700 800 900 1000 Real GDP e) What will be the new equilibrium price level and real GDP in Everton? Price level: Real GDP: $ billion Starting from the initial equilibrium, suppose instead that the central bank of Everton is concerned about the low inflation rate and wishes to increases the price level to 125.The money market in the country of Everton is depicted in the graphs below (all figures are in billions of dollars). 12 ) Suppose that the central bank of Everton wishes to implement a contractionary monetary policy and decreases the money supply by $50 billion. Drew the new money supply curve in the graph below. Plot only the endpoints of MSy line in the graph below. :Book 10 Tools MS. MSz Interest rate (%) 50 100 150 200 2 300 Quantity of money The investment demand curve is shown in the following graph. Interest rate (*) 50 100 150 200 250 Quantity of investmentThe economy of Carlsberg is presently in equilibrium, but is suffering a recession as depicted in the graph below. The central bank of 13 Carlsberg is introducing an expansionary monetary policy to get the economy back to the full-employment level of real GDP. AS 160 AD :Book LAS 140 120 Price index 100 60 380 390 400 410 420 430 440 Real GDP (in billions) B. What increase in aggregate demand is necessary to achieve this? $ billions. b. If successful, what will be the growth rate? Round your answer below to 2 decimal places. c. If successful, what will be the inflation rate? Round your answer below to 2 decimal places.a. If money supply is equal to 90, what are the values of equilibrium Interest rate and investment spending? Interest rate: Investment: $ b. If money supply is equal to 130, what are the values of equilibrium Interest rate and Investment spending? Interest rate: Investment: $ c. If money supply is equal to 110, and money demand increases by 40, draw in the money supply and new money demand curve in graph A. Plot only the endpoints of MS and MD2 In graph A and position those points on the edges of the graphing area. d. What are the values of equilibrium Interest rate and Investment spending? Interest rate: Investment: $The graph below shows information for the economy of Tentelus. 14 16 MO Tools -Book 14 MS MDz 12 10 Rate of interest ($%) 40 60 80 100 120 140 160 Quantity of money B 16 14 Rate of interest () O 100 120 140 160 180 200 220 240 260 Quantity of investment