Correct me if I got anything wrong?

1. (20 points) The country of Iceland has only one commercial bank and a central bank. In Iceland all financial transactions occur within the banking system: no one holds currency. The required reserve ratio imposed by the central bank is 10% of deposits. All amounts are in Iceland Krona Commentare Lommercial bank Anety Liabilities las lentru tank Assets Liabilities treasury bills reserves , required toyerves 16.00 deposit 10.30 loans 85,000 Lapital 20.090 treasury billy Sopo TO TAL=120,000 TOTAL 10,000 3. (points) Provide a T-account for both the commercial bank and the central bank showing how they lookike when the commercial bank holds only the minimum reserves required b. 2 points) Why would the bank not voluntarily hold more reserves? TOTAL 10.00 TOTAL 10.000 lb the role op die bank online and presentes con the more reserves the bank hold, less loans they can makeo therefore protit Krona worth of treasury bills from the commercial bank. Provide a T-account for the commercial bank once the commercial bank lands out its excess reserves after the final round of the money multiplier process d. 14 points) If the central bank wanted to purchase the treasury U bills in order to do expensionary monetary policy, what determines the effectiveness of this monetary policy? Explain your answer 18 points) Show in the appropriate graphs the short and long-run effects of this monetary policy on output and prices. central bank Abbety Liability treasury bills reserves 70,00 20,000 commercial Bank Assets Liability Fequited 20.000 deposits 200,000 loans 185,000 capital 20,000 the required ratio bets a ceiling on the amount of deposity banks can absorb, which limity the loans banks can make. TOTAL: 20,000 TOTAL: 20.000 treasury bills 15.000 TOTAV 720,000 TOTAL 720,000 les PA LRAY Tv EL Abo Shifty to AD, Ei is the equilibrium in Short run Er is the equilibrium in long run output 14) TO ADI AD. 1. (20 points) The country of Iceland has only one commercial bank and a central bank. In Iceland all financial transactions occur within the banking system: no one holds currency. The required reserve ratio imposed by the central bank is 10% of deposits. All amounts are in Iceland Krona. Central Bank of Iceland Commercial Bank Liabilities 15,000 Reserves Assets Treasury bills 15,000 Assets Required reserves Loans Treasury bills Total Liabilities 15,000 Deposits 100,000 85,000 Capital 20,000 20,000 120,000 120,000 Total 15,000 15,000 a. (4 points) Provide a T-account for both the commercial bank and the central bank showing how they look like when the commercial bank holds only the minimum reserves required. b. (2 points) Why would the bank not voluntarily hold more reserves? c. (4 points) Suppose the central bank of Iceland purchases 5,000 Krona worth of treasury bills from the commercial bank. Provide a T-account for the commercial bank once the commercial bank lends out its excess reserves after the final round of the money multiplier process. d. (4 points) If the central bank wanted to purchase the treasury bills in order to do expansionary monetary policy, what determines the effectiveness of this monetary policy? Explain your answer. e. (6 points) Show in the appropriate graphs the short- and long-run effects of this monetary policy on output and prices