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Table A below shows abbreviated balance sheets for the central bank in the country of Teckland and B shows tables for its whole commercial banking
Table A below shows abbreviated balance sheets for the central bank in the country of Teckland and B shows tables for its whole commercial banking system. The target reserve ratio for the banks is 8 percent. (All figures are in billions of dollars.) a. Suppose that the Bank of Teckland sells $4 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. DONT NOT PUT $ in your answer or ",". Use only whole numbers A) Central Bank of Teckland Assets (1) Liabilities Treasury bills (1) $192 $ 194 Notes in circulation $186 $ 186 Short-term loans to banks6 $6 Government deposits $ Deposits of banks 5 $ B) Teckland's Banking System Assets (1) (2) Liabilities Reserves (1) (2) B) Teckland's Banking System Assets (1) (2) Liabilities Reserves: (1) (2) Deposits 150 in vaults 7 in Bank of Teckland 5 Securities 31 Short-term loans from Bank of Teckland 6 Loans to customers 120 Equity b. What effect does this transaction have on the money supply of Teckland? Money supply c. What effect does the transaction have on the banking system's excess reserves? Banks become by $ billion d. If the banks were to fully loan-up, show the result in column (2) of the banking system's Money supply c. What effect does the transaction have on the banking system's excess reserves? Banks become by $ billion d. If the 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
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