ECON6049 Final exam Question 1 (Protected View) - Word Layout References Mailings Review . View Help Tell me what you want to do om the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing b) Amie, Brad and Paula apply for (and receive) loans from their respective banks. Amie receives $1,500 loan; Brad receives $1,000 loan and Paula receive $2,000 loan. Show what happens to banks' balance sheets. What happens to the amount of base money and broad money in the economy? (4 marks) You answer. c) Amie employs Brad to do the gardening for her. She pays Brad $200 by transferring the funds to his account with the Dragon Bank. Sam hires Paula to do accounting for him for $500 and pays by transferring the funds to her account with the Bear Bank. Paula buys a second-hand car from Amie for $1,400 and pays by transferring the funds to her account with the Tiger Bank. Assuming all transactions happen on the same day show the impact on the balance sheet of all the banks. How would the amount of broad money in the economy change as a result of all these transactions? Does any of the banks have a problem? (4 marks) You answer. d) Now assume that in addition to all transactions in c) Paula decides to open an account in the Tiger bank and transfer $1,000 to her new account from her account in the Bear Bank. Would any of the banks have a problem? Explain using information provided in the question. (3 marks) You answer. W F3 X F4 C F5 F6 F7 FB F9 F10 F11 F12 S % & 3 5 6 8 9 O E R T Y U O PECON6049 Final exam Question 1 (Protected View) - Word yout References Mailings Review . View Help Tell me what you want to do the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View. Enable Editing Question 1 (20 marks) Zootopia has three commercial banks and a central bank that issues legal tender and issues base money to commercial banks at the policy interest rate of 1%. Amie has $1,000 in cash that she deposits into her account with the Tiger Bank. Brad has $2,000 in cash that he deposits into his account with the Dragon Bank, Sam has $1,500 in cash that he deposits into his account with the Bear Bank. Paula has $500 that she also deposits into her account with the Bear Bank. a) Show the impact on the balance sheet for the Tiger Bank, Dragon Bank and Bear Bank. What happens to the amount of base money and broad money in the economy when Amie, Brad, Sam and Paula deposit their cash into their bank accounts? (4 marks) Tiger Bank Balance Sheet Assets Liabilities Total Total (Note: Please copy and paste the tables to answer the next sections of the question) Dragon Bank Balance Sheet Assets Liabilities W 019 X C F7 F8 F9 F10 F11 F3 F5 F6 S % & 5 6 8 CO