In Macroland there is $6,000,000 in currency, which is all held by the Bank of Mac as
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Question:
- In Macroland there is $6,000,000 in currency, which is all held by the Bank of Mac as a reserve. The public does not hold any currency, and the bank's desired reserve/deposit ratio is 0.1.
- 1) Show the balance sheet of the Bank of Mac when the central bank(Federal Reserve) sells $1,000,000 worth of government bonds to the Bank of Mac.
- 2) Show the balance sheet of the Bank of Mac after the first round of lending.
Related Book For
Financial Institutions Management A Risk Management Approach
ISBN: 978-0071051590
8th edition
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
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