Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please tell me the answer and explain this questions Table A below shows abbreviated balance sheets for the central bank in the country of Beckland

please tell me the answer and explain this questions

image text in transcribedimage text in transcribed
Table A below shows abbreviated balance sheets for the central bank in the country of Beckland and B shows tables for its whole commercial banking system. The target reserve ratio for the banks is 10 percent. (All figures are in billions of dollars.) a. Suppose that the Bank of Beckland buys $2 billion of government securities (T-bills) from the commercial banks. Show the immediate effects of this transaction on the balance sheets in column (1) of Tables A and B. A) Central Bank of Beckland Assets (1) Liabilities (1) Treasury bills $196 $ Notes in circulation $190 $ Short-term loans to banks 8 Government deposits Deposits of banks B) Beckland's Banking System Assets (1) (2) Liabilities (1) (2) Reserves: Deposits 150 in vaults 8 in Bank of Beckland 7 Securities 33 Short-term loans from Bank of Beckland 8 Loans to customers 115 Equity 5b. What effect does this transaction have on the money supply of Beckland? Money supply. c. What effect does the transaction have on the banking system's excess reserves? Banks become by $ |:| billion. d. Ifthe banks were to fully loan-up, show the result in column (2) of the banking system's balance sheet. To answer this question, complete the column (2) in the above table. Round your answers to the nearest whole number. e. By how much has money supply now changed? Round your answers to the nearest whole number. Change in money supply +/- of $ |:| billion

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Essentials Of Economics

Authors: Bradley Schiller

7th Edition

0073375802, 9780073375809

More Books

Students also viewed these Economics questions