2. In the country of SpringNow, the public is holding a total of $2,000. Total lending...

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2. In the country of SpringNow, the public is holding a total of $2,000. Total lending in the banking sector, which has 5 identical banks, is $30,000. The currency deposit ratio is 5%. (a) Describe the balance sheet for one of the 5 banks. (b) How much reserves do the banks hold as a fraction of total deposits? (c) How large is the money supply in this economy? (d) What is the money multiplier in this economy? (e) How would a $3,000 open market purchase of bonds by SpringNow central bank change total reserves and money supply in SpringNow? Assume that all the banks behave identically. 2. In the country of SpringNow, the public is holding a total of $2,000. Total lending in the banking sector, which has 5 identical banks, is $30,000. The currency deposit ratio is 5%. (a) Describe the balance sheet for one of the 5 banks. (b) How much reserves do the banks hold as a fraction of total deposits? (c) How large is the money supply in this economy? (d) What is the money multiplier in this economy? (e) How would a $3,000 open market purchase of bonds by SpringNow central bank change total reserves and money supply in SpringNow? Assume that all the banks behave identically.

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a Balance sheet for one of the 5 banks Assets Reserves Loans Total Assets Liabilities Deposits Total Liabilities To determine the balance sheet for on... View the full answer