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a) Suppose the Bank of Eastwood opens its doors to depositors and receives $100,000 in cash deposits. Assume that the bank has a required reserve

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a) Suppose the Bank of Eastwood opens its doors to depositors and receives $100,000 in cash deposits. Assume that the bank has a required reserve ratio of 20%. Could this bank make a loan in the amount of $90,000 ? Provide explanation to your answer. (4 marks) b) Consider the following balance sheet of a bank in the banking system: Balance Sheet of Bank A Bank A has $100 in cash deposits which are automatically counted as rescrves. The banking system has a required reserve ratio of 20% and all banks must lend out their excess reserves. In addition, a check with the full amount of the loan must be drawn and deposited with Bank B. Bank B lends out its excess reserves. i) Given the information above, fill in the revised balance shoet of Bank A and the balance sheets of Bank B in the process to show what happens to loan creation, reserves and demand deposits. (4.5 marks) Revised Balance Sheet of Bank A ii) Suppose each successive bank continues to losn out its excess reserves and these excess reserves are then deposited with the next bank, what will be the final impact on money supply? (2.5 tharks) c) Answer the following questions relating to monctary policy. i) What is a "contractionary" monetary policy? (2 marks) ii) State three ways of how the central bank might carry out a "contractionary" monetary policy. (3 marks) d) Classify cach of the following as a private good, common good, or public good. Briefly explain why. ( 4 marks) i) Camels in the dessert. ii) A can of soft drink in the supermarket

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