@ ezto.mheducation.com M Question 8 - Chapter 36 Homework - Connect Chapter 36 Homework @ Saved Help Save&Exit Submit Review Question 36-03 769 Use commercial bank and Federal Reserve Bank balance sheets to demonstrate the immediate effect of each of the points following transactions on commercial bank reserves. Assume the initial reserve ratio is 20 percent. Fill in the appropriate columns of the balance sheets below for each of the following transactions. Consider each transaction separately, not cumulatively. " eBook & Federal Reserve Banks purchase $2 billion worth of securities from banks. b. Commercial banks borrow $1 billion from Federal Reserve Banks at the discount rate. & Print c. The Fed reduces the reserve ratio from 20 percent to 19 percent. o ions: Enter your answers as a whole number. Place your answers in the gray-shaded cells using both tables References Consolidated Balance Sheet: All Commercial Banks A B c Assets: Reserves $40 Securities 60 Loans 102 Liabilities and net worth: Checkable deposits 200 Toans from the Federal 2 Reserve Banks Consolidated Balance Sheet: 12 Federal Reserve Banks A B C 5283 Loans to commercial banks 2 Liabilities and net worth: Reserves of commercial 40 banks Treasury deposits 5 Federal Reserve Notes 225 Other liabilities and net worth 15 B CPrev 8ol Next > @ ezto.mheducation.com M Question 10 - Chapter 36 Homework - Connect Chapter 36 Homework @) Saved Help Save & Exit Submit [ crcemyvor d 10 Problem 36-03 (algo) 769 In the tables that follow you will find consolidated balance sheets for the commercial banking system and the 12 Federal Reserve points Banks. Use columns 1through 3 to indicate how the balance sheets would read after each of transactions ato cis completed. Do not cumulate your answers; that is, analyze each transaction separately, starting in each case from the numbers provided. All accounts are in billions of dollars. Egk Instructions: Enter your answers as a whole number. Bool Consolidated Balance Sheet: All Commercial Banks Print il 2 3 Assets: @ Reserves $34 References Securities 58 Loans 62 Liabilities and net worth: Checkable deposits $ 150 Loans from the Federal Reserve Banks 4 Consolidated Balance Sheet: 12 Federal Reserve Banks 1 2 3 Assets: Securities $60 Loans to commercial banks 4 Liabilities and net worth: Reserves of commercial banks $34 Treasury deposits 3 Federal Reserve Notes 27 @ @ ezto.mheducation.com M Question 10 - Chapter 36 Homework - Connect Chapter 36 Homework @) Saved 10 769 points eBook - Print D References a. A decline in the discount rate prompts commercial banks to borrow an additional $2 billion from the Federal Reserve Banks. Show the new balance sheet numbers in column 1 of each table. b. The Federal Reserve Banks sell $4 billion in securities to members of the public, who pay for the bonds with checks. Show the new balance sheet numbers in column 2 of each table. c. The Federal Reserve Banks buy $3 billion of securities from commercial banks. Show the new balance sheet numbers in column 3 of each table. d. Now review each of the above three transactions, asking yourself these three questions: (1) What change, if any, took place in the money supply as a direct and immediate result of each transaction? (2) What increase or decrease in the commercial banks' reserves took place in each transaction? (3) Assuming a reserve ratio of 20 percent, what change in the money-creating potential of the commercial banking system occurred as a result of each transaction? Transaction a: (1) The money supply , (2) Reserves (((Click to select)_#) from $34 billion to $ billion. (3) The money-creating potential [ (Click to select) )by $ billion. Transaction b: (1) The money supply ( (Click to select) 4 ]by $ billion. (2) Reserves frorn $34 billionto $ billion. (3) The money-creating potential (*(Click to select) #]by $ billion. Transaction (1) The money supply . (2) Reserves from $34 billion to $ billion. (3) The money-creating potential [ (Click to select) )by $ billion. Help Save & Exit Submit [ crcemyvor d @ ezto.mheducation.com M Question 11 - Chapter 36 Homework - Connect Chapter 36 Homework @) Saved Help Save & Exit Submit " Problem 36-07 (algo) 769 Refer to the table for Moola below to answer the following questions. points Investment at Interest (Rate (Potential Real Actual Real GDP at Money Supply | Money Demand | Interest Rate Shown) GDP Interest (Rate Shown) !} $ 500 $ 800 2% $ 80 $ 350 $ 390 eBook 500 700 3 70 350 370 500 600 4 60 350 350 500 500 5 50 350 330 i 500 700 6 70 350 310 @ Instructions: Enter your answers as a whole number. Ratrences a. What is the equilibrium interest rate in Moola? percent b. What is the level of investment at the equilibrium interest rate? $ c. Is there either a recessionary output gap (negative GDP gap) or an inflationary output gap (positive GDP gap) at the equilibrium interest rate and, if either, what is the amount? (Click to select) s)of $ d. Given money demand, by how much would the Moola central bank need to change the money supply to close the output gap? the money supply by $ e. What is the expenditure multiplier in Moola? Next > @