if the entire amount of excess reserves were loaned out, what would happen to Money supply? Now suppose the required reserve ratio was raised to 40%, and assume all excess reserves are lent out, what is the maximum amount of money the banking system could lend? Using the same situation, suppose now that an entity, bought $1 T worth of bonds from the banking system. What is your answer to “c”?
if the entire amount of excess reserves were loaned out, what would happen to Money supply? Now suppose the required reserve ratio was raised to 40%, and assume all excess reserves are lent out, what is the maximum amount of money the banking system could lend? Using the same situation, suppose now that an entity, bought $1 T worth of bonds from the banking system. What is your answer to “c”?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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if the entire amount of
Now suppose the
Using the same situation, suppose now that an entity, bought $1 T worth of bonds from the banking system. What is your answer to “c”?
![2 Total banking system balance sheet (T= trillion)
Assets
Reserves $2 T
Bonds
$2T
Loans $2T
Liabilities
demand deposits $5T
Equity
$1T](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3d74ed9a-8d0e-468c-a828-139e068fa9f6%2Fee82dced-427a-4ac3-8cd8-72f89f453a45%2F2iz5n2d_processed.png&w=3840&q=75)
Transcribed Image Text:2 Total banking system balance sheet (T= trillion)
Assets
Reserves $2 T
Bonds
$2T
Loans $2T
Liabilities
demand deposits $5T
Equity
$1T
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