a, b, and c In the tables that follow you will find consolidated balance sheets for the commercial banking system and the 12 Federal ReserveBanks. Use columns 1 through 3 to indicate how the balance sheets would read after each of transactions a to cis completed. Do notcumulate your answers; that is, analyze each transaction separately, starting in each case from the numbers provided. All accounts arein billions of dollars.Instructions: Enter your answers as a whole number.Consolidated Balance Sheet: All Commercial Banks12Assets:Reserves$33Securities60Loans60Liabilities and net worth:Checkable deposits$150Loans from the Federal Reserve Banks3Customize and control GoogleConsolidated Balance Sheet: 12 Federal Reserve Banks1Assets:Securities$60Loans to commercial banks3Liabilities and net worth:Reserves of commercial banks$33Treasury deposits3Federal Reserve Notes27a. A decline in the discount rate prompts commercial banks to borrow an additional $1 billion from the Federal Reserve Banks. Showthe new balance sheet numbers in column 1 of each table.b. The Federal Reserve Banks sell $3 billion in securities to members of the public, who pay for the bonds with checks. Show the newbalance sheet numbers in column 2 of each table.c. The Federal Reserve Banks buy $2 billion of securities from commercial banks. Show the new balance sheet numbers in column 3of each table.d. Now review each of the above three transactions, asking yourself these three questions: (1) What change, if any, took place in themoney supply as a direct and immediate result of each transaction? (2) What increase or decrease in the commercial banks' reservestook place in each transaction? (3) Assuming a reserve ratio of 20 percent, what change in the money-creating potential of thecommercial banking system occurred as a result of each transaction?Transaction a:(1) The money supply (Click to select) V(2) Reserves (Click to select)Vfrom $33 billion to $billion(3) The money-creating potential (Click to select)by $billion.Transaction b:(1) The money supply (Click to select) V by $billion.(2) Reserves (Click to select) V from $33 billion tobillion.(3) The money-creating potential (Click to select)by $billion.Transaction c(1) The money supply (Click to select)(2) Reserves (Click to select)7from $33 billion to $billion.(3) The money-creating potential (Click to select)by $billion.

Answered: Image /qna-images/answer/953decab-0ae1-4b72-b50d-ed47131ec3f7.jpg

In the tables that follow you will fin Banks. Use columns 1 through 3 to indicate how the balance sheets would read after each of transactions a to cis completed. Do not cumulate your answers; that is, analyze each transaction separately, starting in each case from the numbers provided. All accounts are in billions of dollars. olidated balance sheets for the system and the 12 Reserve Instructions: Enter your answers as a whole number. Consolidated Balance Sheet: All Commercial Banks Assets: Reserves $33 Securities 60 Loans 60 Liabilities and net worth: Checkable deposits $150 Loans from the Federal Reserve Banks 3 Customize and control Google Consolidated Balance Sheet: 12 Federal Reserve Banks Assets: Securities $60 Loans to commercial banks 3 Liabilities and net worth: Reserves of commercial banks $33 Treasury deposits 3 Federal Reserve Notes 27

In the tables that follow you will fin Banks. Use columns 1 through 3 to indicate how the balance sheets would read after each of transactions a to cis completed. Do not cumulate your answers; that is, analyze each transaction separately, starting in each case from the numbers provided. All accounts are in billions of dollars. olidated balance sheets for the system and the 12 Reserve Instructions: Enter your answers as a whole number. Consolidated Balance Sheet: All Commercial Banks Assets: Reserves $33 Securities 60 Loans 60 Liabilities and net worth: Checkable deposits $150 Loans from the Federal Reserve Banks 3 Customize and control Google Consolidated Balance Sheet: 12 Federal Reserve Banks Assets: Securities $60 Loans to commercial banks 3 Liabilities and net worth: Reserves of commercial banks $33 Treasury deposits 3 Federal Reserve Notes 27

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Financial Statements

Financial statements (or financial reports) are the formal records of the financial activities that are undertaken by a firm. They are convenient instruments used for analyzing a company’s financial position and performance. Financial ratios are created with the help of the numerical values that are derived from the financial statements. They give meaningful information about the financial performance of the company.

Question

a, b, and c

In the tables that follow you will find consolidated balance sheets for the commercial banking system and the 12 Federal Reserve
Banks. Use columns 1 through 3 to indicate how the balance sheets would read after each of transactions a to cis completed. Do not
cumulate your answers; that is, analyze each transaction separately, starting in each case from the numbers provided. All accounts are
in billions of dollars.
Instructions: Enter your answers as a whole number.
Consolidated Balance Sheet: All Commercial Banks
1
2
Assets:
Reserves
$33
Securities
60
Loans
60
Liabilities and net worth:
Checkable deposits
$150
Loans from the Federal Reserve Banks
3
Customize and control Google
Consolidated Balance Sheet: 12 Federal Reserve Banks
1
Assets:
Securities
$60
Loans to commercial banks
3
Liabilities and net worth:
Reserves of commercial banks
$33
Treasury deposits
3
Federal Reserve Notes
27
a. A decline in the discount rate prompts commercial banks to borrow an additional $1 billion from the Federal Reserve Banks. Show
the new balance sheet numbers in column 1 of each table.
b. The Federal Reserve Banks sell $3 billion in securities to members of the public, who pay for the bonds with checks. Show the new
balance sheet numbers in column 2 of each table.
c. The Federal Reserve Banks buy $2 billion of securities from commercial banks. Show the new balance sheet numbers in column 3
of each table.
d. Now review each of the above three transactions, asking yourself these three questions: (1) What change, if any, took place in the
money supply as a direct and immediate result of each transaction? (2) What increase or decrease in the commercial banks' reserves
took place in each transaction? (3) Assuming a reserve ratio of 20 percent, what change in the money-creating potential of the
commercial banking system occurred as a result of each transaction?
Transaction a:
(1) The money supply (Click to select) V
(2) Reserves (Click to select)
V
from $33 billion to $
billion
(3) The money-creating potential (Click to select)
by $
billion.
Transaction b:
(1) The money supply (Click to select) V by $
billion.
(2) Reserves (Click to select) V from $33 billion to
billion.
(3) The money-creating potential (Click to select)
by $
billion.
Transaction c
(1) The money supply (Click to select)
(2) Reserves (Click to select)
7from $33 billion to $
billion.
(3) The money-creating potential (Click to select)
by $
billion.

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