ECB Bank is a commercial bank in Country A. The T-account of ECB Bank is shown below: A. Liabilities Assets (millions) (millions) $100,000 $200,000 Deposits Reserves $100,000 Loans i. If the commercial banks in Country A are required to maintain a reserve ratio of 8%, how much excess reserves are now held by ECB Bank? If ECB Bank decides not to hold excess reserves, by how much will the economy's H. money supply increase or decrease? Explain. Assume the Central Bank of Country A requires a reserve ratio of 8% and banks in Country B. urrently. A do not hold excess reserves curi i. Ifthe Central Bank now has atarget to increase the economy's money supply by $4,000 S. million, what amount of bonds will the government need to buy or sell? Assume the Central Bank conducts the open-market operations, state one situation that ii. might cause the increase in the economy's money supply to be lower than the Central Bank's target?

ECB Bank is a commercial bank in Country A. The T-account of ECB Bank is shown below: A. Liabilities Assets (millions) (millions) $100,000 $200,000 Deposits Reserves $100,000 Loans i. If the commercial banks in Country A are required to maintain a reserve ratio of 8%, how much excess reserves are now held by ECB Bank? If ECB Bank decides not to hold excess reserves, by how much will the economy's H. money supply increase or decrease? Explain. Assume the Central Bank of Country A requires a reserve ratio of 8% and banks in Country B. urrently. A do not hold excess reserves curi i. Ifthe Central Bank now has atarget to increase the economy's money supply by $4,000 S. million, what amount of bonds will the government need to buy or sell? Assume the Central Bank conducts the open-market operations, state one situation that ii. might cause the increase in the economy's money supply to be lower than the Central Bank's target?

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 3PA

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