Answered step by step
Verified Expert Solution
Question
1 Approved Answer
if the federal reserve purchases $250 million in US Treasury Securities what will happen to overall bank deposits under the following assumptions: Banks convert 100%
if the federal reserve purchases $250 million in US Treasury Securities what will happen to overall bank deposits under the following assumptions:
Banks convert 100% of excess reserves to loans, borrowers return 70% of cash to banks, and banks' reserve requirement is 10%.
the answer is $625 million I just need to know how to get there.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started