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i need part E and F answered. A-D are already solved Suppose that there is a person. Person D. He makes $50,000 deposits to the

i need part E and F answered. A-D are already solved image text in transcribed
image text in transcribed
Suppose that there is a person. Person D. He makes $50,000 deposits to the Chase bank. The reserve to us (a) Make the account when the Person D deposits in the bank. Assets Required reserve Excess reserve Balance sheet of Chase Liabilities 2.500 Depoutte 47.500 50,000 Required reserverquired to deposits -0.05 50,000 = $2500 Excess reserve total reserve required reserve = 50,000-2500 = $47,500 (b) Money supply is sum of currency with public and deposits with the bank Monetary base is the sum of currency with public and reserve Money supply does not change because the person has deposited his cash in his bank. This means the deposit, the currency has decreased by 550.000 and deposits has created by 550,000 Monetary base does not change became the person has depouted his cath his bank. This means that with the deposats, the currency has decreased by $50,000 and total reserves has increased by $50,000 (c) Suppose now bank C makes as many fontis as he could. He could make maximum amount of Solich is el to excess amount It means that excess reserves are loaned out which is equal to 547,500 Make the account when the Chase bank loaned out the amount Assets Required teserve Loans Balance sheet of Chase Liabilities 2.500 Deposits 47.500 S0.000 (d) Money supply increases by equal to loan amount because bank loaned out the amount in the form of cask Ihs Money supply increase by S47.500 Monetary base does not change because currency has increased by the amount of $47.500 and reserves has decreased by the amount of 547,500 Note: Ascending to Chess policy, only first four sub parts must be attempted by an expert at a time. Please post other subparts separately c. (5 points) If this new loan is eventually fully deposited back into the banking system, and each subsequent deposit is eventually fully loaned back out, how much does the money supply change, in total, as a result of Daniel's deposit, and what will be the balance sheet of the entire banking system (including Chase Bank)? Bank System's Balance Sheet Assets Liabilities Figure 4: T-Account of the entire banking system f. (5 points) Finally, suppose the Federal Reserve Sells a $5,000 Treasury bill to Daniel, which he buys by writing a personal check. Depict the effect this will have on Chase Bank's T- Account. What will Chase be required to do, after paying out Daniel's personal check? Chase Bank's Balance Sheet Assets Liabilities Figure 5: T-Account or Chase Bank

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