Suppose the Canadian economy has only two commercial banks: Bank A and Bank B. The following table shows their current balance sheets in dollars. Deposits Loans Reserve The money supply in period 1 Bank A Assets 75.1 83 Liabilities 158.1 Assets 122.14 135 Bank B Liabilities 257.14 a. Suppose that individuals hold 417 dollars in cash. What is the money supply in the economy? Express your answer in dollars rounded to the nearest second decimal. b. Suppose that the banks cannot make additional loans because they would exceed their desire reserve ratio (both banks have he same reserve ratio). What is the reserve ratio? Express your answer in percentage rounded to the nearest first decimal.
Suppose the Canadian economy has only two commercial banks: Bank A and Bank B. The following table shows their current balance sheets in dollars. Deposits Loans Reserve The money supply in period 1 Bank A Assets 75.1 83 Liabilities 158.1 Assets 122.14 135 Bank B Liabilities 257.14 a. Suppose that individuals hold 417 dollars in cash. What is the money supply in the economy? Express your answer in dollars rounded to the nearest second decimal. b. Suppose that the banks cannot make additional loans because they would exceed their desire reserve ratio (both banks have he same reserve ratio). What is the reserve ratio? Express your answer in percentage rounded to the nearest first decimal.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Monetary System
Section: Chapter Questions
Problem 10PA
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