Question: Please help with this question. confused. In the table below you will find simplified consolidated balance sheets for the chartered banking system and the Bank

Please help with this question. confused.

Please help with this question. confused. In the table below you willfind simplified consolidated balance sheets for the chartered banking system and the

In the table below you will find simplified consolidated balance sheets for the chartered banking system and the Bank of Canada. Use columns 1-3 to indicate how the balance sheets would read after each of transactions in parts (a) to (c) is 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. a. A decline in the bank rate prompts chartered banks to borrow an additional $1 billion from the Bank of Canada. Show the new balance-sheet figures in column 1 of each table. b. The Bank of Canada sells $3 billion in securities to the public, who pay for the bonds with cheques. Show the new balance sheet figures in column 2 of each table. c. The Bank of Canada buys $2 billion of securities from chartered banks. Show the new balance sheet numbers in column 3 of each table. Instructions: All answers below are to be entered as whole numbers. Consolidated Balance Sheet: All chartered banks (billions of dollars) (1) (2) (3) Assets : Cash reserves $33 $ $ $ Securities 60 Loans 60 Liabilities: Demand deposits $150 $ $ Advances from Bank of Canada 3 Balance Sheet: Bank of Canada (billions of dollars) (1) (2) (3) Assets : Securities $60 $ $ $ Advances to chartered banks 3 Liabilities : Reserves of chartered banks $33 $ $ $ Government of Canada deposits 3 Notes in circulation 27d. Now review all of the above 3 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 chartered banks' cash reserves took place in each transaction? (3) Assuming a desired reserve ratio of 20 percent, what change in the moneycreating potential of the chartered banking system occurred as a result of each transaction? Transaction a: 1. The money supply - Options 2. Reserves from $33 to $ |:| billion. Decrease / Increase / Do not Change 3. Money-creating potential by $ |:| billion. Transaction b: 1. The money supply by as |:| billion- 2. Reserves from $33 to $ |:| billion. 3. Money-creating potential by $ |:| billion. Transaction c: 1. The money supply . 2. Reserves from $33 to $ - billion. 3. Money-creating potential by $ |:| billion

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