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all of these questions are related so I cannot separately post them please do as much as you can Question 04: Fill in the blank

all of these questions are related so I cannot separately post them please do as much as you can image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

Question 04: Fill in the blank cells (a) - (e) in the balance sheets below for both banks after the Vincent loan of $150 and after Bank B lends money to Bank A to cover Bank A's reserve requirement. Make sure assets equal liabilities for both banks in this simple case where we will ignore owner's capitalet worth. Bank A Bank B Assets Liabilities Assets Liabilities Reserves in Safe (a) Deposits $1,000 Reserves in Safe $100 Deposits $2,000 Reserves at Fed $100 Loan from bank B ( (C) Reserves at Fed (d) Loans (b) Loans $1,500 Loan to Bank A (e) Step 02: We will continue the story, but let's see how the Federal Reserve can influence things through its open market operations - that is, the buying and selling of bonds on the open market. Question 05: When the Fed sells bonds to the public (whether individuals, banks, corporations, mutual funds) the Fed gets [ the bond OR cash ) and the public gets [ the bond OR cash ). Therefore the money supply - money held by the public ( increases OR decreases ] On another day the same thing might happen where Bank A needs to borrow money from Bank B, but in the meantime let's say the "Fed through its open market operations sold a $300 U.S. Treasury bond to Bank B. Start from the original balance sheet for Bank B. Bank B Assets Liabilities Reserves in Safe $100 D. Deposits $2,000 Reserves at Fed (a) Loans $1,500 U.S. Bonds (b) Question 06: Fill in the blank cells (a) - (b) in the balance sheet to the right. Hint: Bank B will just pay for the bond by telling the Fed to take the money out of the holdings it has at its regional Federal Reserve Bank. its regional Federal Reserve Bank. Question 07: Bank B's required reserves have not changed - its demand deposits are the same $2,000. But its excess reserves are now... a) Zero b) $200 c) $300 FF rate Rs Question 08: After buying the bond from the Fed, Bank B will have [ more or less ] excess reserves to lend to other banks in the Federal Funds Market. If other banks also bought bonds from the Fed, the supply of funds, labeled Rs in the diagram of the Federal Funds Market to the right, will [ increase OR decrease ]. X x Draw or imagine drawing the Rs supply curve shifted left. Rd Q Question 09: This will have the effect of [ increasing OR decreasing ] the Federal Funds Rate (labeled FF rate). This in turn affects other interest rates in the economy. Question 10: In summary, then... If the Fed sells bonds the money supply goes up OR goes down the federal funds rate goes up OR goes down other interest rates go up OR go down borrowing in the economy for investment, consumption increases OR decreases aggregate demand increases OR decreases the Fed is engaged in counteracting (or fighting) inflation OR a recession bond prices go up OR go down Assume there is a 10% required reserve ratio (rrr) and it is 4:50 pm. Banks close in ten minutes. Banks must meet their required reserve ratio (rrr) at closing. Recall, Required Reserves = rrr x Demand Deposits. Demand deposits are checkable deposits and represent liabilities to the bank. Remember, think of bank reserves as just "cash in the safe", although banks will hold some of their reserves at their district Federal Reserve bank. Question 01: Are both banks in compliance with the required reserve ratio of 10% when they close in ten minutes? a) No, only Bank A is in compliance. Bank B is required to have more than the $500 it has in reserve. b) No, only Bank B is in compliance. Bank A is required to have more than the $200 it has in reserve. c) Yes, both banks are in compliance. Bank A has $200 in reserves, but is only required to have $100, while Bank B has $500 in reserves, but is only required to have $200. Bank A Bank B Assets Liabilities Assets Liabilities $150 $100 Reserves in Safe D. Deposits $1,000 Reserves in Safe $2,000 D. Deposits $50 $400 Reserves at Fed Reserves at Fed Loans $800 Loans $1,500 It's now 4:55 pm, and Bank A just loaned $150 to Vincent right before closing. Vincent walks out with the $150 in cash that was in Bank A's safe. Of course, Bank A is going to charge Vincent 5% interest for the loan - it wasn't making any interest on the money when it was in the safe! Question 02: Is Bank A now in compliance with the Fed's required reserve ratio? [ yes OR no ] Recall, Total Reserves = Required Reserves + Excess Reserves Question 03: Closing time! Since Bank B has excess reserves of $ it will be happy to lend money overnight to Bank A which is short $_ in the Federal Funds Market at the prevailing Federal Funds Rate! This is the interest rate banks will charge one another for short, sometimes overnight, loans. Why shouldn't they lend to each other, they're not making any interest on the money in their safe and very little at the Fed. Plus, it's all electronic, no one is moving physical dollars from one bank vault to another. Question 04: Fill in the blank cells (a) - (e) in the balance sheets below for both banks after the Vincent loan of $150 and after Bank B lends money to Bank A to cover Bank A's reserve requirement. Make sure assets equal liabilities for both banks in this simple case where we will ignore owner's capitalet worth. Bank A Bank B Assets Liabilities Assets Liabilities Reserves in Safe (a) Deposits $1,000 Reserves in Safe $100 Deposits $2,000 Reserves at Fed $100 Loan from bank B ( (C) Reserves at Fed (d) Loans (b) Loans $1,500 Loan to Bank A (e) Step 02: We will continue the story, but let's see how the Federal Reserve can influence things through its open market operations - that is, the buying and selling of bonds on the open market. Question 05: When the Fed sells bonds to the public (whether individuals, banks, corporations, mutual funds) the Fed gets [ the bond OR cash ) and the public gets [ the bond OR cash ). Therefore the money supply - money held by the public ( increases OR decreases ] On another day the same thing might happen where Bank A needs to borrow money from Bank B, but in the meantime let's say the "Fed through its open market operations sold a $300 U.S. Treasury bond to Bank B. Start from the original balance sheet for Bank B. Bank B Assets Liabilities Reserves in Safe $100 D. Deposits $2,000 Reserves at Fed (a) Loans $1,500 U.S. Bonds (b) Question 06: Fill in the blank cells (a) - (b) in the balance sheet to the right. Hint: Bank B will just pay for the bond by telling the Fed to take the money out of the holdings it has at its regional Federal Reserve Bank. its regional Federal Reserve Bank. Question 07: Bank B's required reserves have not changed - its demand deposits are the same $2,000. But its excess reserves are now... a) Zero b) $200 c) $300 FF rate Rs Question 08: After buying the bond from the Fed, Bank B will have [ more or less ] excess reserves to lend to other banks in the Federal Funds Market. If other banks also bought bonds from the Fed, the supply of funds, labeled Rs in the diagram of the Federal Funds Market to the right, will [ increase OR decrease ]. X x Draw or imagine drawing the Rs supply curve shifted left. Rd Q Question 09: This will have the effect of [ increasing OR decreasing ] the Federal Funds Rate (labeled FF rate). This in turn affects other interest rates in the economy. Question 10: In summary, then... If the Fed sells bonds the money supply goes up OR goes down the federal funds rate goes up OR goes down other interest rates go up OR go down borrowing in the economy for investment, consumption increases OR decreases aggregate demand increases OR decreases the Fed is engaged in counteracting (or fighting) inflation OR a recession bond prices go up OR go down Assume there is a 10% required reserve ratio (rrr) and it is 4:50 pm. Banks close in ten minutes. Banks must meet their required reserve ratio (rrr) at closing. Recall, Required Reserves = rrr x Demand Deposits. Demand deposits are checkable deposits and represent liabilities to the bank. Remember, think of bank reserves as just "cash in the safe", although banks will hold some of their reserves at their district Federal Reserve bank. Question 01: Are both banks in compliance with the required reserve ratio of 10% when they close in ten minutes? a) No, only Bank A is in compliance. Bank B is required to have more than the $500 it has in reserve. b) No, only Bank B is in compliance. Bank A is required to have more than the $200 it has in reserve. c) Yes, both banks are in compliance. Bank A has $200 in reserves, but is only required to have $100, while Bank B has $500 in reserves, but is only required to have $200. Bank A Bank B Assets Liabilities Assets Liabilities $150 $100 Reserves in Safe D. Deposits $1,000 Reserves in Safe $2,000 D. Deposits $50 $400 Reserves at Fed Reserves at Fed Loans $800 Loans $1,500 It's now 4:55 pm, and Bank A just loaned $150 to Vincent right before closing. Vincent walks out with the $150 in cash that was in Bank A's safe. Of course, Bank A is going to charge Vincent 5% interest for the loan - it wasn't making any interest on the money when it was in the safe! Question 02: Is Bank A now in compliance with the Fed's required reserve ratio? [ yes OR no ] Recall, Total Reserves = Required Reserves + Excess Reserves Question 03: Closing time! Since Bank B has excess reserves of $ it will be happy to lend money overnight to Bank A which is short $_ in the Federal Funds Market at the prevailing Federal Funds Rate! This is the interest rate banks will charge one another for short, sometimes overnight, loans. Why shouldn't they lend to each other, they're not making any interest on the money in their safe and very little at the Fed. Plus, it's all electronic, no one is moving physical dollars from one bank vault to another

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