Explain how pursuing a nonborrowed reserves target by the Bank of Canada could cause the overnight interest rate to fluctuate. Draw a diagram for the market for reserves (settlement balances) to support your explanation.
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Explain how pursuing a nonborrowed reserves target by the Bank of Canada could cause the overnight interest rate to fluctuate. Draw a diagram for the market for reserves (settlement balances) to support your explanation.
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- Required reserves in Bank two should be 10% of $80,000 demand deposits which equals 8,000. Correct?Explain how pursuing an overnight interest rate target by the Bank of Canada could cause the quantity of nonborrowed reserves to fluctuate. Draw a diagram for the market for reserves (settlement balances) to support your explanation.In reference to the Peruvian Crisis of 1986, explain why and how the Peruvian central bank lost 75% of of its international reserves in two years. Make sure to use the central bank's balance sheet and a money market diagram to back up the response. Please explain thoroughly. Include diagram, graph, etc. Thank you.
- Draw a diagram of the market for bank reserves and show a situation in which there is excess demand for reserves at the target federal funds rate. What action should the Open Market Account Manager should take? Explain and show the changes as a result of the appropriate action in the diagram. Label the diagram clearly showing the changesAssuming a required reserve ratio of 5%, interest rate on reserves of 1%, and interest rate on loans of 6%, what is the effective cost of the reserve requirement on a $10,000 deposit?When $100 is deposited in the banking system, it leads to maximum expansion in bank deposits of $1,000. What is the required reserve ratio assuming that the excess reserves are 0 20% 10% 5% 0%
- How can the bank meet an expected net deposit drain of 4%?Calculate Total Potential Deposit Creation given the following information. rrr = .09 Total Deposits: $6300 Total Reserves: $4200a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent. Explain in details.b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not? Explain in details. c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum increase in the money supply be what you found it to be in part a)? Why or why not? Explain in details.
- Say that First Commercial Bank has reserves of $100, loans at $400 and checkable deposits of $500. The required reserve ratio is 10%. If the bank has a deposit outflow of $40, is the bank in violation of the required reserve ratio? What is the maximum amount of deposit outflow the bank can sustain without violating the ratio?Suppose People's Bank of China buys 20 billion yuan of government securities from ICBC. Show how the transaction changes the balance sheets by filling in the numbers. People's Bank of China Assets (billions of yuan) Liabilities (billions of yuan) Securities enter your response here Reserves of ICBC enter your response here ICBC Assets (billions of yuan) Liabilities (billions of yuan) Securities enter your response here Reserves enter your response hereIf the Legal reserve ratio is 20% find the value of the Money multiplier.
