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Please write and explain detailedly, Thanks : ) Asger Jorgensen, who currently works in Copenhagen, decided to accept a proposal to come to work for
Please write and explain detailedly, Thanks : )
Asger Jorgensen, who currently works in Copenhagen, decided to accept a proposal to come to work for a company in Toronto. When Asger arrives in Canada, he arranges for the money he has in his bank account to be transferred from his Danish Bank to a Canadian Bank. The total amount is equivalent to CAexist1,000,000. Assume the Canadian bank's (simplified) Balance Sheet, before the transfer, is given below, and that the bank's reserves are such that the target reserve ratio is achieved. a. What will be the immediate effect of the transfer in the bank's balance sheet? What is the reserve ratio now? b. What will be the final version of the balance sheet after the bank has adjusted its loans so as to maximize profits? Assume no cash-drainage. c. What is the overall change in the money supply in this economy? d. How will your answer in (b) differ, if there is a cash-drainage of 10%Step by Step Solution
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