answer question 1 & 3

EXERCISES 1. Suppose that the Fed makes an open market purchase of $200,000 in bonds from QRS Bank. a. Show how this affects the Fed balance sheet. 447 based on this changed situation, din TUV Bank. What is the b. Show how this affects the balance sheet of QRS Bank. C. Assume that QRS Bank lends out as much as it can, based on What does its balance sheet look like after it makes the loans? Assume that all the proceeds from those loans are deposited in TUV B effect on TUV Bank's balance sheet? Assume that the required reserve ratio is 10 percent. What new opportu Bank now face? What is it likely to do? What new opportunity does TUV ont pala nf $15 million in hands to HILD LU llapici CU of this fact. Using the model 3. Suppose that investor confidence falls, and the Fed is aware of this fact le presented in this chapter, show (a)-(c) below graphically: a. How a fall in investor confidence affects the schedule for intended investment b. What the Fed could do, influencing the federal funds market, to try to count in investor confidence. C. The effect on AE and output if the Fed is able to perfectly counteract the fall in busine confidence. d. Is the Fed likely to be as accurate as assumed in part (c)? Why, or why not