Suppose now the Fed, as part of its "Quantitative Easing" policy, conducts an open market purchase 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 QE policy. Reflect the immediate impact of this open market operation in the balance sheets below. Also reflect the changes in the balance sheet of the banking system due to the money multiplier process. (Put + or -, and appropriate number, to reflect the changes. Leave the unchanged entries as blank.). Federal Reserve Banking System Assets Liabilities Assets Liabilities Securities Currency Reserves Deposits Borrowing Bank capital Loans to banks Reserves Securities Loans to HH/firms Total assets Total liab. Total assets Total liab.

Suppose now the Fed, as part of its "Quantitative Easing" policy, conducts an open market purchase 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 QE policy. Reflect the immediate impact of this open market operation in the balance sheets below. Also reflect the changes in the balance sheet of the banking system due to the money multiplier process. (Put + or -, and appropriate number, to reflect the changes. Leave the unchanged entries as blank.). Federal Reserve Banking System Assets Liabilities Assets Liabilities Securities Currency Reserves Deposits Borrowing Bank capital Loans to banks Reserves Securities Loans to HH/firms Total assets Total liab. Total assets Total liab.

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter13: Money And The Banking System

Section: Chapter Questions

Problem 16CQ

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