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Page 5 6. Use the following T-account information and the fact that the required reserve ratio in this economy is 0.10 (i.c., 10%) to answer the questions below (Show your work) Treasury dd T 30 Bonds 600 Bonds Fed 300 dd 270 B Loans to dd 30 Banks 200 T FRN 200 Public 1650 Loans from Banks 950 Banks Cash 30 dd p 1650 dd P dd 270 B Other Cash 100 Loans to Deposits 150 Bonds 100 Public 950 Loans from Other Bonds 100 Fed 200 Deposits 150 a. What are the Bank Reserves? b. What are the Bank Required Reserves? c. What are the Bank Excess Reserves? d. What is the current Money Supply (MI)? e. If Banks maximized their Loans to the Public, using up all their excess reserves, what will be the new Money Supply? f. The Fed did not like the new Money Supply and sold 50 in Bonds to Banks. After the banks bought the bonds, they have to call in loans from the public. What will be the new Money Supply end up being after the banks made the required changes? g. If the Banks refused the buy the 50 in bonds from the Fed and the Public bought the 50 in bonds, what would be the new Money Supply?

Page 5 6. Use the following T-account information and the fact that the required reserve ratio in this economy is 0.10 (i.c., 10%) to answer the questions below (Show your work) Treasury dd T 30 Bonds 600 Bonds Fed 300 dd 270 B Loans to dd 30 Banks 200 T FRN 200 Public 1650 Loans from Banks 950 Banks Cash 30 dd p 1650 dd P dd 270 B Other Cash 100 Loans to Deposits 150 Bonds 100 Public 950 Loans from Other Bonds 100 Fed 200 Deposits 150 a. What are the Bank Reserves? b. What are the Bank Required Reserves? c. What are the Bank Excess Reserves? d. What is the current Money Supply (MI)? e. If Banks maximized their Loans to the Public, using up all their excess reserves, what will be the new Money Supply? f. The Fed did not like the new Money Supply and sold 50 in Bonds to Banks. After the banks bought the bonds, they have to call in loans from the public. What will be the new Money Supply end up being after the banks made the required changes? g. If the Banks refused the buy the 50 in bonds from the Fed and the Public bought the 50 in bonds, what would be the new Money Supply?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Page 5 6. Use the following T-account information and the fact that the required reserve ratio in this economy is 0.10 (i.c., 10%) to answer the questions below (Show your work) Treasury dd T 30 Bonds 600 Bonds Fed 300 dd 270 B Loans to dd 30 Banks 200 T FRN 200 Public 1650 Loans from Banks 950 Banks Cash 30 dd p 1650 dd P dd 270 B Other Cash 100 Loans to Deposits 150 Bonds 100 Public 950 Loans from Other Bonds 100 Fed 200 Deposits 150 a. What are the Bank Reserves? b. What are the Bank Required Reserves? c. What are the Bank Excess Reserves? d. What is the current Money Supply (MI)? e. If Banks maximized their Loans to the Public, using up all their excess reserves, what will be the new Money Supply? f. The Fed did not like the new Money Supply and sold 50 in Bonds to Banks. After the banks bought the bonds, they have to call in loans from the public. What will be the new Money Supply end up being after the banks made the required changes? g. If the Banks refused the buy the 50 in bonds from the Fed and the Public bought the 50 in bonds, what would be the new Money Supply?
Transcribed Image Text:Page 5 6. Use the following T-account information and the fact that the required reserve ratio in this economy is 0.10 (i.c., 10%) to answer the questions below (Show your work) Treasury dd T 30 Bonds 600 Bonds Fed 300 dd 270 B Loans to dd 30 Banks 200 T FRN 200 Public 1650 Loans from Banks 950 Banks Cash 30 dd p 1650 dd P dd 270 B Other Cash 100 Loans to Deposits 150 Bonds 100 Public 950 Loans from Other Bonds 100 Fed 200 Deposits 150 a. What are the Bank Reserves? b. What are the Bank Required Reserves? c. What are the Bank Excess Reserves? d. What is the current Money Supply (MI)? e. If Banks maximized their Loans to the Public, using up all their excess reserves, what will be the new Money Supply? f. The Fed did not like the new Money Supply and sold 50 in Bonds to Banks. After the banks bought the bonds, they have to call in loans from the public. What will be the new Money Supply end up being after the banks made the required changes? g. If the Banks refused the buy the 50 in bonds from the Fed and the Public bought the 50 in bonds, what would be the new Money Supply?
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