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Question no 1 2. Working through an open-market operation Assume that the following balance sheet portrays the state of the banking system. The banks currently
Question no 1
2. Working through an open-market operation Assume that the following balance sheet portrays the state of the banking system. The banks currently have no excess reserves. Assets Liabilities and Net Worth (Billions of Dollars) Total reserves 40 Checkable deposits 160 Loans 50 Securities 70 Total 160 Total 160 What is the required reserve ratio? O 5% 10% O 25% O 40% Suppose that the Federal Reserve (the "Fed") buys $10 million of bonds from a bond dealer, who immediately deposits the funds in her checking account.What is the initial impact of this transaction? 0 The banking system's holdings of securities tall by $10 million, and the banking system's total reserves rise by 510 million. 0 Checkable deposits rise by $10 million, and the banking system's total reserves rise by $10 million. 0 The banking system's holdings of securities rise by 510 million, and the banking system's total reserves fall by 510 million. 0 Checkable deposits rise by $10 million, and the banking system's holdings of securities rise by 510 million. As a result of the Fed's purchase of $10 million of securities, checkable deposits in the banking system can potentially V by as much as VStep by Step Solution
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