Question
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.
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 = _$______________
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