Suppose now the Fed, as part of its "Quantitative Easing" policy, conducts an open marketpurchase of $500 long-term mortgage-backed securities (MBS) from the banking system.Furthermore, assume that banks decide to hold $400 of excess reserves following the QEpolicy. Reflect the immediate impact of this open market operation in the balance sheetsbelow. Also reflect the changes in the balance sheet of the banking system due to the moneymultiplier process. (Put + or -, and appropriate number, to reflect the changes. Leave theunchanged entries as blank.).Federal ReserveBanking SystemAssetsLiabilitiesAssetsLiabilitiesSecuritiesCurrencyReservesDepositsBorrowingBank capitalLoans to banksReservesSecuritiesLoans to HH/firmsTotal assetsTotal liab.Total assetsTotal liab.

Quantitative easing refers to the nontraditional technique used by the central bank or Fed to…

Answered: Suppose now the Fed, as part of its…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following monetary data: 2000 2008 Monetary base ($bn) 8.5 8.7 Reserve deposit ratio (%) 20 15 Currency deposit ratio (%) 13. 23 a. Calculate the change in the money supply between 2000-2008 if the currency deposit ratio changes as shown, but the reserve deposit ratio stays constant. b. Calculate the change in the money supply between 2000-2008 if the reserve deposit ratio changes as shown, but the currency deposit ratio stays constant. c. Which of the two changes is more responsible for the overall change in the money supply from 2000-2008? Why?
Assume that Jimmy Cash has $2,500 in his checking account at Folsom Bank and uses his checking account debit card to withdraw $250 of cash from the bank's ATM machine. By what dollar amount did the M1 money supply change as a result of this single, isolated transaction? Instructions: Enter your answer as a whole number. %24
6
Assume the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is 0.08. iii. The demand for money is given by M = $Y(0.89 -3.71). If the monetary base is $94 billion and nominal income is $4.5 trillion, the equilibrium interest rate will be %. (Round your response to two decimal places.)
Suppose the desired reserve ratio in Canada is 15%. Assume that the Bank of Canada has decided to increase the total quantity of money in the economy-as measured by M1-by $150 million. The Bank plans to do this by printing Canadian dollars. How much money must the Bank print to increase the money supply by the desired amount? (Calculate your answer in millions of CAD, round it to two decimal places, and write it without units. E.g., write 1.00 for $1 million.)
8
Suppose that the following information describes the banking system in Belarus. Currency = $940 billion Checking Deposits = $1,475 billion Total Reserves = S198 billion Required Reserves = $177 billion (a) Calculate the level of the monetary base (MB) in the banking system of Belarus. (b) Given the above data calculate the money multiplier (m). Round vour answer to 2 decimal places.
Suppose that you are in an economy with reserve requirements are equal to 15%, and cash drain is equal to 7%. This economy currently has $4,000 total banking deposits in the banking system. All of the banks have zero capital. If the Central Bank lowers the reserve requirements from 15% tp 9%, then what will be the increase in the quantity of total bank deposits in the banking system? Note: round all answers to two decimal places. Do not include currency signs in your answer.
Suppose a commercial banking system had 300,000 of outstanding checkable deposits and actual reserves of 20,000. If the ratio is 0.1%, the banking system can expand the supply of money by maximum of $_________ Can someone tell me how to solve that and explain please
Suppose that Neha makes a new cash deposit of $120,000. If the assumptions of the multiplier-deposit expansion process hold, (with the required reserve ratio set at 20%), this deposit will _____ (increase or decrease) the money supply by _________. <fill in blank (Note: Currency held by the public is counted in the money supply as part of M1.)
Hey, I need help with the following macro question. Thank you in advance! Imagine that the chair of the Federal Reserve announced that, as of the following day, all currency in circulation in the United States would be worth 10 times its face denomination. For example, a $10 bill would be worth $100; a $100 bill would be worth $1,000; and so forth. Furthermore, the balances in all checking and savings accounts would be multiplied by 10. So, for example, if you had $500 in your checking account, as of the following day your balance would be $5,000. Would you actually be 10 times better off on the day the announcement took effect? Why or why not?
Explain how pursuing an overnight interest rate target by the Bank of Canada could cause the quantity of nonborrowed reserves to fluctuate. Draw a diagram for the market for reserves (settlement balances) to support your explanation.

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