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Scenario: Assets and Liabilities of the Banking System Scenario: Assets and Liabilities of the Banking System Assets Liabilities Loans Deposits $1,000,000 $900,000 100,000 Reserves Suppose that the required reserve ratio is 10%, and the Fed buys $25,000 worth of U.S. Treasury bills from the banking system. If the banking system does NOT want to hold any excess reserves, will be added to the money supply. $1 million about $667,000 $250,000 about $111,000

Scenario: Assets and Liabilities of the Banking System Scenario: Assets and Liabilities of the Banking System Assets Liabilities Loans Deposits $1,000,000 $900,000 100,000 Reserves Suppose that the required reserve ratio is 10%, and the Fed buys $25,000 worth of U.S. Treasury bills from the banking system. If the banking system does NOT want to hold any excess reserves, will be added to the money supply. $1 million about $667,000 $250,000 about $111,000

ECON MACRO
ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 2.3P
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Scenario: Assets and Liabilities of the Banking System Scenario: Assets and Liabilities of the Banking System Assets Liabilities Loans Deposits $1,000,000 $900,000 100,000 Reserves Suppose that the required reserve ratio is 10%, and the Fed buys $25,000 worth of U.S. Treasury bills from the banking system. If the banking system does NOT want to hold any excess reserves, will be added to the money supply. $1 million about $667,000 $250,000 about $111,000
Transcribed Image Text:Scenario: Assets and Liabilities of the Banking System Scenario: Assets and Liabilities of the Banking System Assets Liabilities Loans Deposits $1,000,000 $900,000 100,000 Reserves Suppose that the required reserve ratio is 10%, and the Fed buys $25,000 worth of U.S. Treasury bills from the banking system. If the banking system does NOT want to hold any excess reserves, will be added to the money supply. $1 million about $667,000 $250,000 about $111,000
(Figure: Consumption and Real GDP) Use Figure: Consumption and Real GDP. The marginal propensity to consume is: Consumption per period (trillions of dollars) Consumption $6 5 4 3 2 1 I I 0 1 2 3 4 5 6 7 8 9 10 Real GDP per period = disposable personal incom per period (trillions of dollars) 0.5. 1.0. 2.0. 0. ܢܘ
Transcribed Image Text:(Figure: Consumption and Real GDP) Use Figure: Consumption and Real GDP. The marginal propensity to consume is: Consumption per period (trillions of dollars) Consumption $6 5 4 3 2 1 I I 0 1 2 3 4 5 6 7 8 9 10 Real GDP per period = disposable personal incom per period (trillions of dollars) 0.5. 1.0. 2.0. 0. ܢܘ
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