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These set of questions are related to deposits/reserves/monetary base of the banking system/financial institutions. Any help and assistance to provide answers would be very much

These set of questions are related to deposits/reserves/monetary base of the banking system/financial institutions. Any help and assistance to provide answers would be very much appreciated!

  1. If Bank of Canada sells $200m of bonds to Bank A. What happens to reserves and monetary base? Please provide your answer with detailed explanation along with the use of T-accounts for illustration.
  2. If Bank of Canada buys $100m of bonds from the public in cash. What happens to reserves and monetary base? Please provide your answer with detailed explanation along with the use of T-accounts for illustration.
  3. Bank A receives $100m of deposits and decides not to lend any money. How much deposit creation takes place for the entire banking system? Please provide your answer with detailed explanation along with the use of T-accounts for illustration.
  4. If Bank of Canada lends $200m of bonds to Bank A, but depositors withdraw $100m and hold it as cash, what happens to reserves and monetary base? Please provide your answer with detailed explanation along with the use of T-accounts for illustration.

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