Money Banking Financial Markets & Institutions Worksheet Paper Assignment Help

Money Banking Financial Markets & Institutions Worksheet Paper Assignment Help

 
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Assume that all banks in the banking system are initially “fully loaned up”, and that the Required Reserve Ratio is 20%.
a) If the Fed sells $1000 of bonds on the open market, how will your answers to both 1d) and 1e) change?Explain.Continue to assume that the Required Reserve Ratio = 20%.





If the Federal Reserve buys $500 on the open market, and the money they paid is deposited in Bank A.Explain and illustrate the impact of the Fed’s purchase on Bank A’s balance sheet below:
Calculate Bank A’s excess reserves.Explain and/or show your work.
How many new loans can Bank A make?Assuming that Bank A makes these loans and the money is deposited in Bank B, show the impact of the loan, and subsequent deposit, on the balance sheets of Bank A and Bank B, below:
By how much will the reserves of the banking system change as a result of the Fed’s purchase above?Using the money multiplier, calculate the total change in deposits (and loans) for the banking system as a whole.Explain and show your work.
Illustrate your answer in the t-account for the banking system as a whole below:




BANK A BALANCE SHEET



ASSETS LIABILITIES



BANK A BALANCE SHEET



ASSETSLIABILITIES



BANK B BALANCE SHEET



ASSETS LIABILITIES



ECN 111 – Module 6: Worksheet Assignment for Video 6.2



PAGE 2



BANKING SYSTEM BALANCE SHEET



ASSETS LIABILITIES



b)Illustrate your answers to 2a) in the t-account for the banking system as a whole below.You do not need to show t-accounts for Banks A & B.



BANKING SYSTEM BALANCE SHEET