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Suppose the Bank of Canada buys $20 million worth of government securities from RBC, a commercial bank 1. Using T-account analysis, show what happens to
Suppose the Bank of Canada buys $20 million worth of government securities from RBC, a commercial bank 1. Using T-account analysis, show what happens to the balance sheets of the BoC immediately after this transaction 2. Using T-account analysis, show what happens to the balance sheets of RBC immediately after this transaction. 3. To maximize profit, how much of loans can RBC make at most? Use T-account to show the change for its balance sheet reflecting this lending alone (before any cash withdrawal). 4. Assume all commercial banks have desired reserve ratio 10% and no excess reserves, and the currency deposit ratio is 0. After the multiple deposit creation process is completed, what is the net change for the balance sheet of the whole commercial banking system? Show the T account
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