(a) Table 5 shows the balance sheet of the banking system of Country Z as of...
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(a) Table 5 shows the balance sheet of the banking system of Country Z as of 31 May 2021. Reserve Loan Total Assets $ (billions) 300 1,500 1,800 Deposits Total Table 5 Liabilities. $ (billions) 1,800 1,800 The current required reserved ratio was 12% and the public holds $90 billion cash in hand. (i) Calculate the current money supply. Does the banking system fully loan up? Support your answer with relevant figure and show your workings. (ii) Draw a new balance sheet of the banking system of Country Z if the central bank increases the required reserve ratio by 3% and the banking system is fully loaned up. Show your workings. (a) Table 5 shows the balance sheet of the banking system of Country Z as of 31 May 2021. Reserve Loan Total Assets $ (billions) 300 1,500 1,800 Deposits Total Table 5 Liabilities. $ (billions) 1,800 1,800 The current required reserved ratio was 12% and the public holds $90 billion cash in hand. (i) Calculate the current money supply. Does the banking system fully loan up? Support your answer with relevant figure and show your workings. (ii) Draw a new balance sheet of the banking system of Country Z if the central bank increases the required reserve ratio by 3% and the banking system is fully loaned up. Show your workings.
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1 The current money supply M1 can be calculated using the money multip... View the full answer
Related Book For
International Financial Reporting and Analysis
ISBN: 978-1408075012
5th edition
Authors: David Alexander, Anne Britton, Ann Jorissen
Posted Date:
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