Answered step by step
Verified Expert Solution
Question
1 Approved Answer
there are 6 parts to this questions so letters A-E should be anwsered please. Suppose a banking system with the following balance sheet has no
there are 6 parts to this questions so letters A-E should be anwsered please.
Suppose a banking system with the following balance sheet has no excess reserves. Assume that banks will make loans in the full amount of any excess reserves that they acquire and will immediately be able to eliminate loans from their portfolio to cover inadequate reserves. $400 Assets (in Billions) Total reserves Securities Loans Total assets Liabilities (in Billions) $50 Transactions account deposits $200 $150 S400 Total liabilities $400 Instructions: In part a, enter your response as a percentage rounded to one decimal place. For all other parts, enter your responses as a whole number a. What is the reserve requirement? b. Suppose the reserve requirement is changed to 5 percent. Reconstruct the balance sheet of the total banking system after all banks have fully utilized their lending capacity Assets (in Billions) Total reserves Securities Liabilities (in Billions) Transactions account deposits Loans Total assets Total liabilities c. By how much has the money supply changed as a result of the lower reserve requirement (part dj SI billion Suppose the Fed now buys $20 billion of securities directly from the banks. What will the banks books look like imediately after this purchase but before the banks make any additional loans? Liabilities (in Billions) Transactions account deposits Assets (in Billions) Total reserves Securities Loans Total assets Total abilities e. How much excess reserves do the banks have now? $ billion 1. By how much can the money supply now increase due to this open market purchase? billion LA $ Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started