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3. The central bank bolds $1,400 in government securities. The commercial baaks have deposited $300 with the central bank and bold $100 in vault cash.

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3. The central bank bolds $1,400 in government securities. The commercial baaks have deposited $300 with the central bank and bold $100 in vault cash. $700 are held as currency by the publie. The required reserve ratio is 20%. Banks are loaned up. (a) Fill the central bank's T-account below. (This is sot a complete 3 -account. The two adss say sot be equal. ) (b) What is the moncy supply? (c) The central bank would like to change the money supply to $2,300 either by an open market operation or a change in the required reserve ratio. (i) What should be the new ratio if the fequired reserve ratio is changed? (ii) How much govemment securities should be purchased'sold if an open market operation is undertaken? (d) What will be the changes in interest rate and security price affer the change in (c)? Just wite t. for mnthangot

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