Question
Suppose the reserve requirement is 15% and banks are holding no excess reserves, fill in the blanks below. Show your work for full credit.
Suppose the reserve requirement is 15% and banks are holding no excess reserves, fill in the blanks below. Show your work for full credit. Assets Reserves T-bills Loans Total $8,000 Liabilities + NW Deposits Net Worth $80,000 $10,000 Total Liabilities + NW $90,000 2. Suppose deposits decrease by $10,000. By how much would the money supply change? (Hint: use the money multiplier to calculate) 3. What are the open market operations? How does an open market sale (OMS) affect the bank reserves (R) and the money supply (M1)? What happens to the federal funds rate (ffr)? Use the Market for Bank Reserves to graphically illustrate and explain your answer.
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1 Filling in the blanks Assets Liabilities NW Reserves 12000 Deposits 80000 Tbills 8000 Net Worth 10000 Loans 90000 Total Liabilities NW 100000 Total ...Get Instant Access with AI-Powered Solutions
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