The following table shows the balance sheet of the banking system of Country X. Assets Liabilities...
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The following table shows the balance sheet of the banking system of Country X. Assets Liabilities Reserve Loans Total (b) (c) $ (billions) The banking system holds $100 billion excess reserve and public does not hold any cash in hand. (a) Identify and explain briefly whether reserve in banking system is included in money supply. (d) 300 Demand Deposits 700 1,000 Total $ (billions) Calculate the actual reserve ratio and required reserve ratio. 1,000 1,000 Draw a new balance sheet of the banking system if no excess reserve is held by the banking system. Show your workings. Briefly explain how the central bank uses either open market operation or required reserve ratio to decrease the money supply. The following table shows the balance sheet of the banking system of Country X. Assets Liabilities Reserve Loans Total (b) (c) $ (billions) The banking system holds $100 billion excess reserve and public does not hold any cash in hand. (a) Identify and explain briefly whether reserve in banking system is included in money supply. (d) 300 Demand Deposits 700 1,000 Total $ (billions) Calculate the actual reserve ratio and required reserve ratio. 1,000 1,000 Draw a new balance sheet of the banking system if no excess reserve is held by the banking system. Show your workings. Briefly explain how the central bank uses either open market operation or required reserve ratio to decrease the money supply.
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Answers a Reserve in Banking System and Money Supply No the reserve held by the banking system 300 billion is not included in the money supply Money s... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0077400163
6th edition
Authors: J. David Spiceland, James Sepe, Mark Nelson
Posted Date:
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