Question
Suppose that the money multiplier is fixed and the Feds balance sheet is Federal Reserve Bank Asset Liabilities Securities $900 Currency held by nonbank public
Suppose that the money multiplier is fixed and the Feds balance sheet is
| Federal Reserve Bank | |||
| Asset | Liabilities | ||
| Securities | $900 | Currency held by nonbank public | $700 |
| Gold | $100 | Vault cash held by banks | $100 |
|
|
| Reserve deposits | $200 |
| Total assets | $1000 | Total liabilities | $1000 |
and the commercial banks balance sheet is
| Consolidated Balance Sheet of Banks | |||
| Assets | Liabilities | ||
| Vault cash | $100 | Deposits | $3000 |
| Reserve deposits | $200 |
|
|
| Loans | $2700 |
|
|
| Total assets | $3000 | Total liabilities | $3000 |
Suppose that the Fed increases the monetary base by 15%. The money supply will
| A. | increase by $555 | |
| B. | increase by $450. | |
| C. | increase by $360 | |
| D. | increase by $150 | |
| E. | increase by $1000 |
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Financial Accounting Cases
Authors: Camillo Lento, Jo-Anne Ryan
3rd Canadian Edition
1119594642, 978-1119594642
