The following balance sheet (column 1) for "All Member Banks Combined" serves as a starting point.Assume a closed economy and not a Global economy exists.

12

Assets

Vault Cash$84,000$84,000

Reserves at Fed Res290,400

Required276,000

Excess14,400

Federal Funds Sold432,000432,000

Loans 5,760,000

Securities1,680,000

Other Assets1,281,6001,281,600___

Total Assets$9,528,000$___________

Liabilities

Demand Deposits$3,600,000$___________

Time Deposits4,195,2004,195,200

FF Purchased432,000432,000

Loans, Discounts and Advances14,40014,400

Other Liabilities417,600417,600

Capital Account868,800868,800

Total Liabilities + NW$9,528,000$_____________

In the problem, assume that reserve requirements that must be maintained in cash or at the Federal Reserve are 10% on demand deposits and 0% on time deposits. Please fill in the aggregate balance sheet for member banks for the fiscal policy problem.

a.Fill in column 2 with this part.(Assume column 1 is the starting position.)Because of the nature of the economy and the large federal deficit, the U.S. Government finances a $44,000 deficit by selling $20,000 of new bonds to banks and $24,000 of new bonds to non-banks. How would your answer possibly change in a Global economy?

Banks

AssetsLiabilities

Res _________^DD $__________

^Sec $________

$_______ securities$_________ securities

$________ DD

Private Sector

Banks

$_________Demand Deposits

Bank RR = .10 ($___________)- 84,000 = _$______________