:)

26) Suppose that you observe the following information regarding the balance sheets of the Federal Reserve System and the U.S. banking system: Federal Reserve System System (in billions) Assets Liabilities Securities $705 Reserves $105 Loans to Fis $0 Currency $600 Banking System (in billions) Assets Liabilities Required Reserve $90 Deposits Excess Reserves $15 Capital Securities $100 Loans $795 $900 $100 (a) Assuming that the required reserve ratio is 10%, calculate the following: The level of the monetary base (in billions) The level of the money supply in billions) The currency ratio The excess reserves ratio The money multiplier (b) Suppose the U.S. economy experiences a large contraction (a recession) and central bank responds by conducting a $100 billion purchase of securities from U.S. banks. Using the ratios that you calculated in part a, predict the effects that this open market operation will have on the monetary base and the money supply, () During the financial crisis of 2008, the central bank attempted to inject massive amounts of liquidity into the economy. However, rather than increasing their lending banks hoarded this liquidity by holding the proceeds from the open market operations as excess reserves. How will the monetary base and money supply respond to the same open market operation in part b, if banks put all $100 billion in proceeds into excess reserves? 26) Suppose that you observe the following information regarding the balance sheets of the Federal Reserve System and the U.S. banking system: Federal Reserve System System (in billions) Assets Liabilities Securities $705 Reserves $105 Loans to Fis $0 Currency $600 Banking System (in billions) Assets Liabilities Required Reserve $90 Deposits Excess Reserves $15 Capital Securities $100 Loans $795 $900 $100 (a) Assuming that the required reserve ratio is 10%, calculate the following: The level of the monetary base (in billions) The level of the money supply in billions) The currency ratio The excess reserves ratio The money multiplier (b) Suppose the U.S. economy experiences a large contraction (a recession) and central bank responds by conducting a $100 billion purchase of securities from U.S. banks. Using the ratios that you calculated in part a, predict the effects that this open market operation will have on the monetary base and the money supply, () During the financial crisis of 2008, the central bank attempted to inject massive amounts of liquidity into the economy. However, rather than increasing their lending banks hoarded this liquidity by holding the proceeds from the open market operations as excess reserves. How will the monetary base and money supply respond to the same open market operation in part b, if banks put all $100 billion in proceeds into excess reserves