Q.2 Suppose the Iron Bank is the only bank in an economy, reserve requirement ratio is...

 

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Q.2 Suppose the Iron Bank is the only bank in an economy, reserve requirement ratio is 12.5% and there are no excess reserve and cash drain in the economy. b) Suppose $1000 are deposited at the bank. (Assume that a person receives a check of 1000 TL from the Central Bank by selling Treasury bonds to the Central Bank and deposits it at the Iron Bank.) Show the initial and final changes in two different balance sheets. Q.2 Suppose the Iron Bank is the only bank in an economy, reserve requirement ratio is 12.5% and there are no excess reserve and cash drain in the economy. b) Suppose $1000 are deposited at the bank. (Assume that a person receives a check of 1000 TL from the Central Bank by selling Treasury bonds to the Central Bank and deposits it at the Iron Bank.) Show the initial and final changes in two different balance sheets.

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Assuming that the check is deposited in the morning ... View the full answer