ModernBank RealBank Assets Liabilities Assets Liabilities Base Money Payable on demand Base Money X Payable on demand 30 125 300 Loans Loans 175 220 a. Based on the information on the above Balance Sheets for ModernBank and RealBank, the value of X (base money) should be 300. True or False b. The amount of total (broad) money in ModernBank will increase more than 100 if ModernBank creates additional 100 as a newv loan. True or False.

Principles of Macroeconomics (MindTap Course List)
7th Edition
ISBN:9781285165912
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter16: The Monetary System
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ModernBank
RealBank
Assets
Liabilities
Assets
Liabilities
Base Money
Payable on demand Base Money
X Payable on demand 30
125
300
Loans
Loans
175
220
a. Based on the information on the above Balance Sheets for ModernBank and RealBank, the value of X (base money) should be 300. True or False
b. The amount of total (broad) money in ModernBank will increase more than 100 if ModernBank creates additional 100 as a new loan. True or False.
Transcribed Image Text:ModernBank RealBank Assets Liabilities Assets Liabilities Base Money Payable on demand Base Money X Payable on demand 30 125 300 Loans Loans 175 220 a. Based on the information on the above Balance Sheets for ModernBank and RealBank, the value of X (base money) should be 300. True or False b. The amount of total (broad) money in ModernBank will increase more than 100 if ModernBank creates additional 100 as a new loan. True or False.
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