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Use the information for the banking system below to respond to the next three items.

Use the information for the banking system below to respond to the next three items.

Essentials of Economics (MindTap Course List)
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 4PA
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Use the information for the banking system below to respond to the next three items. 16. 17. 18. C. d. a. b. a. b. C. d. a. b. Assets C. d. Bank Reserves Loans Securities (Bonds) The banking system is currently fully loaned up (in equilibrium) if the reserve ratio is: 25%. 20%. 10%. 5%. Using the reserve ratio found in the previous question, if the Fed buys $5 billion worth of government bonds from banks, assuming no leakages into cash, bank reserves will equal equal billion, and excess reserves will equal billion. $20 billion $70 billion $10 billion Liabilities $5; $4 $25; $5 $25; $10 $24; $4 Deposits $100 billion After a $5 billion purchase of securities (government bonds) from banks by the Fed, if all banks make loans until excess reserves equal zero and there are no cash leakages, checkable deposits can expand as a result of new lending by a maximum of (using the reserve ratio found above) billion. $5 $10 $20 $25
Transcribed Image Text:Use the information for the banking system below to respond to the next three items. 16. 17. 18. C. d. a. b. a. b. C. d. a. b. Assets C. d. Bank Reserves Loans Securities (Bonds) The banking system is currently fully loaned up (in equilibrium) if the reserve ratio is: 25%. 20%. 10%. 5%. Using the reserve ratio found in the previous question, if the Fed buys $5 billion worth of government bonds from banks, assuming no leakages into cash, bank reserves will equal equal billion, and excess reserves will equal billion. $20 billion $70 billion $10 billion Liabilities $5; $4 $25; $5 $25; $10 $24; $4 Deposits $100 billion After a $5 billion purchase of securities (government bonds) from banks by the Fed, if all banks make loans until excess reserves equal zero and there are no cash leakages, checkable deposits can expand as a result of new lending by a maximum of (using the reserve ratio found above) billion. $5 $10 $20 $25
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