need answers for number 3 II. PROBLEMSSuppose that the economy has the following money supply and demand equations:Money Supply: M = 8000Money Demand: M= 10,000 – 40,000rwhere money is in billions of dollars and interest rates, r, is written as a decimal(e.g., an interest rate of 10% would be written as .1 in the equation).A. Determine the equilibrium interest rate and quantity of money.B. What will happen in the money market if the interest rate is currently 10%?What is the amount of excess supply of or excess demand for money?C. Show in graph that at this interest rate (10%) there is disequilibrium in themoney market.2. Assume that a particular bank has excess reserves of Php800,000 and checkabledeposits of Php1,500,000. If the reserve ratio is 20%, what is the size of the bank'sactual reserves?3. Suppose that GRAB Bank is a newly created bank in your hometown. Consider thefollowing transactions:Owners of the bank sold shares of stocks to the public (which includes owners'equity) amounting to P1,000,000.To fully operate, GRAB Bank purchased physical assets amounting toP500,000 (with approximate useful life of assets of 20 years and salvage valueapproximated at P100,000).First deposit to the bank (in the form of checkable deposits) was accepted fromindividuals and business firms amounting to P200,000.Now suppose that the BSP mandated all commercials banks to keep a fractionout of the total deposit valued at 25%Required: Trace the changes in GRAB Bank's balance sheet, starting with the firsttransaction up to the last transaction cited above.

Liability and capital Amount (P) Assets Amount (P) Equity shares 1000000 Physical asset 500000…

Answered: 1. Suppose that the economy has the…

1. Suppose that the economy has the follow Money Supply: M = 8000 Money Demand: M= 10,000 – 40 where money is in billions of dollars and (e.g., an interest rate of 10% would be wr

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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