ECON 1103 In-class Assignment #15

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Mount Royal University *

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1103

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Economics

Date

Jan 9, 2024

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pdf

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1

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ECON 1103 In-class #14 Q1 Assume there exists a banking system in Calgary with three commercial banks (Bowness Bank, Bank of Downtown, Falcon Ridge Bank). If the Bank of Alberta which is the central bank for the province requires 10% reserve, and the banks have no deposits; however, if someone deposited $1,600 at the Bank of Bowness, calculate how much money can be created through the fracLonal reserve scheme. Bowness Bank Asset Liabili8es Required Reserve: 160 Deposit: 1600 Excess Reserve (loan): 1,440 Jay took out a loan from Bowness Bank and make a deposit at Bank of DT Bank of DT Asset Liabili8es Required Reserve: 144 Deposit: 1,440 Excess Reserve (loan) 1,296 Maria took out a loan from DT Bank and made a deposit at Falcon Ridge Bank Falcon Ridge Bank Asset Liabili8es Required Reserve: 129.6 Deposit: 1,296 Excess Reserve (loan) 1,166.4 1. What is the value of the money mulLplier? 10 2. If the Central bank of Alberta wants to expand the money supply, should they increase or decrease the required reserve? increase 3. How much money can be created at the end of this process? 14,400
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