Description
Problem Set # 4 The commercial banks in Zapland haveSuppose that the reserve requirement for checking deposits is 10 percent and that banks do not hold any excess reserves.If the Fed sells $10,000 of government bonds, what is the effect on the economys reserves and money supply?Now suppose the Fed lowers the reserve requirement to 5%, but banks choose to hold another 5% of deposits as excess reserves. Why might banks do so?What is the overall change in the money multiplier and the money supply as a result of these actions?Which of the following is money? Reserves$250 Loans$1,000 Deposits$2,000 Total Assets$2,500 Construct the commercial banks balance sheet. If you are missing any assets call them other assets: if you are missing any liabilities, call them other liabilities.Calculate the banks reserve ratioIf banks hold no excess reserves, calculate the money multiplier. An American Express travelers check Checking deposits at Washington Mutual bank. The check you have just written to pay for school fees.
Tags:
money supply
government bonds
Mutual bank
User generated content is uploaded by users for the purposes of learning and should be used following FENTYESSAYS.COM ESSAY’s honor code & terms of service.