Essay Problem 1. There is $9,000,000 of curency in Colnland, which are all held by the Bank of Coco as a reserve. The public does not hold any currency, and the bank's desired reserve/deposit ratio Is 0.2 Show the balance sheet of the Bank of Coco when the bank does not make any 1) lending. 1000 2) Show the balance sheet of the Bank of Coco after the second round of lending. 3.

Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter28: Monetary Policy And Bank Regulation
Section: Chapter Questions
Problem 39P: Suppose the Fed conducts an open market sale by selling $10 million in Treasury bonds to Acme Bank....
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Essay Problem 1.
There is $9,000,000 of currency in Colnland, whlch are all held by the Bank of Coco as a
reserve. The public does not hold any currency, and the bank's desired reserve/deposit ratio
Is 0.2
1) Show the balance sheet of the Bank of Coco when the bank does not make any
lending.
1,000
Ba
2) Show the balance sheet of the Bank of Coco after the second round of lending.
Transcribed Image Text:Essay Problem 1. There is $9,000,000 of currency in Colnland, whlch are all held by the Bank of Coco as a reserve. The public does not hold any currency, and the bank's desired reserve/deposit ratio Is 0.2 1) Show the balance sheet of the Bank of Coco when the bank does not make any lending. 1,000 Ba 2) Show the balance sheet of the Bank of Coco after the second round of lending.
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