Assume that every bank's desired reserve ratio is 4 percent, banks hold no excess reserves, the public's holdings of currency do not change, and banks' holdings of securities do not change. If reserves in the banking system increase by $4 billion as a result of Bank of Canada lending to financial institutions $4 billion and chequable deposits increase by $96 billion, the banking system is not in equilibrium because at this point across the banking system, banks' actual reserves exceed banks' desired reserves by $ 0.16 billion. (Enter your response as an integer or a decimal. Do not round. Enter a positive value. Do not include a plus sign in your response.) For equilibrium to be reached, banks will continue lending out excess reserves, which will have the effect of increasing chequable deposits across the banking system. Show the T-account for the banking system in equilibrium. (Select the correct choice below, and fill in the answer boxes to complete your choice. Enter your responses as integers or decimals. Do not round. Enter a negative value to indicate a decrease, and enter a positive value to indicate an increase. Do not include plus signs in your responses.) A. Liabilities Assets Loans (borrowings from the Bank of Canada) Chequable deposits $ b Reserves b b Loans $ b O B. Assets Reserves $ b Liabilities Loans (borrowings from the Bank of $ Canada) Chequable deposits $ b Loans $ b b C. Liabilities Assets Loans (borrowings from the Bank of $ Canadal b Reserves $ b C. Assets Liabilities $ b Reserves $ b Loans (borrowings from the Bank of Canada) Loans $ b Chequable deposits $ b D. Assets Liabilities Reserves $ b Loans (borrowings from the Bank of Canada) $ b Chequable deposits $ b Loans b Assume that every bank's desired reserve ratio is 4 percent, banks hold no excess reserves, the public's holdings of currency do not change, and banks' holdings of securities do not change. If reserves in the banking system increase by $4 billion as a result of Bank of Canada lending to financial institutions $4 billion and chequable deposits increase by $96 billion, the banking system is not in equilibrium because at this point across the banking system, banks' actual reserves exceed banks' desired reserves by $ 0.16 billion. (Enter your response as an integer or a decimal. Do not round. Enter a positive value. Do not include a plus sign in your response.) For equilibrium to be reached, banks will continue lending out excess reserves, which will have the effect of increasing chequable deposits across the banking system. Show the T-account for the banking system in equilibrium. (Select the correct choice below, and fill in the answer boxes to complete your choice. Enter your responses as integers or decimals. Do not round. Enter a negative value to indicate a decrease, and enter a positive value to indicate an increase. Do not include plus signs in your responses.) A. Liabilities Assets Loans (borrowings from the Bank of Canada) Chequable deposits $ b Reserves b b Loans $ b O B. Assets Reserves $ b Liabilities Loans (borrowings from the Bank of $ Canada) Chequable deposits $ b Loans $ b b C. Liabilities Assets Loans (borrowings from the Bank of $ Canadal b Reserves $ b C. Assets Liabilities $ b Reserves $ b Loans (borrowings from the Bank of Canada) Loans $ b Chequable deposits $ b D. Assets Liabilities Reserves $ b Loans (borrowings from the Bank of Canada) $ b Chequable deposits $ b Loans b
