(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) 400 1,200 1,600 Deposits Total Table 5 Liabilities $ (billions) 1,600 1,600 The current required reserved ratio was 20% and the public holds $70 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 decrease the required reserve ratio by 4% and the banking system is fully loaned up. Show your workings. (b) Hong Kong government decided to sell up to $2.55 billion retail green bond this month. Explain how this action could affect the money supply in Hong Kong. (a) Table 5 shows the balance sheet of the banking system of Country Z as of 31 May 2021. Reserve Loan Total Assets $ (billions) 400 1,200 1,600 Deposits Total Table 5 Liabilities $ (billions) 1,600 1,600 The current required reserved ratio was 20% and the public holds $70 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 decrease the required reserve ratio by 4% and the banking system is fully loaned up. Show your workings. (b) Hong Kong government decided to sell up to $2.55 billion retail green bond this month. Explain how this action could affect the money supply in Hong Kong. (a) Table 5 shows the balance sheet of the banking system of Country Z as of 31 May 2021. Reserve Loan Total Assets $ (billions) 400 1,200 1,600 Deposits Total Table 5 Liabilities $ (billions) 1,600 1,600 The current required reserved ratio was 20% and the public holds $70 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 decrease the required reserve ratio by 4% and the banking system is fully loaned up. Show your workings. (b) Hong Kong government decided to sell up to $2.55 billion retail green bond this month. Explain how this action could affect the money supply in Hong Kong. (a) Table 5 shows the balance sheet of the banking system of Country Z as of 31 May 2021. Reserve Loan Total Assets $ (billions) 400 1,200 1,600 Deposits Total Table 5 Liabilities $ (billions) 1,600 1,600 The current required reserved ratio was 20% and the public holds $70 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 decrease the required reserve ratio by 4% and the banking system is fully loaned up. Show your workings. (b) Hong Kong government decided to sell up to $2.55 billion retail green bond this month. Explain how this action could affect the money supply in Hong Kong.
Expert Answer:
Answer rating: 100% (QA)
a i The current money supply M1 can be calculated using the money multiplier formula M1 M1 M1 M1 M1 ... 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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