Expert answer:Homework Question Help
Answer & Explanation:3.
1) Assume
that in a country the total holdings of banks were as follows:
Amount
in million dollars
Required Reserve
$45
Excess Reserve
$15
Deposits
$750
Loans
$600
Treasury Bonds
$90
Show that the balance sheet balances if these are the only assets and
liabilities.
Assuming that people hold no currency, what happens to each of these
values if the central bank changes the reserve requirement ratio to 2%, banks
still want to hold the same percentage of excess reserves, and banks do not
change their holdings of Treasury bonds? How much does the money supply change
by?
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