Question
Assume the total checkable deposits available at commercial banks are $9300 billion. The central banks sets the required reserve ratio to 5%. The conslidated balance
Assume the total checkable deposits available at commercial banks are $9300 billion. The central banks sets the required reserve ratio to 5%. The conslidated balance sheet of the central bank is as follow: Assets ($ billion)Liabilities ($ billion)Securities 1800Reserve 5300Loans to commercial banks 3500 The following questions are independent from each other: A. What is the maximum amount that the central bank can lend to commercial banks? $Answer for part 1 billion B. If the central bank decided to decrease the required reserve ratio by 2%, the excess reserve would increase by $ Answer for part 2 billion. C. The central bank decided to sell $300 billion government securities to commercial banks, by how much can the money supply be destroyed? $ Answer for part 3 billion D. The central bank decided to buy $300 billion government securities from commercial banks. Rewrite the balance sheet of the central bank below: Assets ($ billion) Liabilities ($ billion)Securities Answer for part 4 and coordinate 1 Reserve Answer for part 4 and coordinate 2Loans to commercial banks Answer for part 4 and coordinate 3
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