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3. The central bank holds $1,400 in government securities. The commercial banks have deposited $300 With the central bank and hold $100 in vault cash.
3. The central bank holds $1,400 in government securities. The commercial banks have deposited $300 With the central bank and hold $100 in vault cash. $700 are held as currency by the public. The required reserve ratio is 20%. Banks are loaned up. (a) Fill the central bank's Taccount below. Assets Liabilities Gov't securities Reserve Currency in circulation (b) What is the money supply? (0) 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. (1) What should be the new ratio if the required reserve ratio is changed? (ii) How much government securities should be purchased/sold if an open market operation is undertaken
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