Suppose the central bank conducts an unusually large open market purchase of bonds held by the First National Bank of $1400 billion due to a sharp contraction in the economy. Before the First National Bank turns proceeds to productive uses, update the balance sheet of the First National Bank

You are given the following balance sheet of the Summer Bank (21)                     Balance sheet of the Winter bank Assets Liabilities   Cash                             $ 8,000 Deposited with the Fed   $ 5,000   Loans                           $ 117,000      Deposits $ 80,000   Capital $ 50,000 Total                             $ 130,000 Total      $ 130,000   The required reserve ratio (RRR) on all deposits is 5%   d,What would be the excess reserves of this bank after the RRR is changed to 4%?   e.How much new amount of loan will this bank be able to create with the RRR of 4%?   f.How much new amount of loan the entire banking system be able to create because of the excess reserves?   g.What happened to the money supply after the RRR was decreased to 4% from 5%?

Suppose that the current Federal Reserve federal funds rate is 3.0%. If the Fed were to raise it by .25%, it would bring the rate to 3.25%. Explain how the rate increase will impact the market for borrowed funds and the overall economy.

If the value of a bank's loan declines, what is the corresponding reduction on the other side of its balance sheet? Equity is reduced by the amount of the decline in the value of the loan. Borrowing from other banks are reduced by the amount of the decline in the value of the loan. Deposits are reduced by the amount of the decline in the value of the loan. Cash is reduced by the amount of the decline in the value of the loan.

Squeezed at home by razor-thin margins and negative interest rates, Japanese banks have more than doubled borrowing and lending in dollars since 2017. Why is this practice risky? Japanese banks are exposed to liquidity risks due to difficulty in pulling funds out of foreign countries in a short time period. Japanese banks are exposed to interest rate risks due to uncontrollable rate changes outside the jurisdiction of Japanese central bank. Japanese banks are exposed to default risks due to lending to foreign borrowers. Japanese banks are exposed to exchange rate risks due to mismatched assets and liabilities in different currencies.

If the central bank sells $500 in bonds to a bank that has issued $10000 in loans and is exactly meeting the reserve requirement of 10%, what will happen to the amount of loans and to the money supply in general?

The Federal Deposit Insurance Corporation is at least partly to credit for which of the following? A) Lower taxes and government spending B) Increased interest rates for savers C) Increased interest rates for borrowers D) Reduced bank runs

Suppose a bank faces a gap of -20 between its interest-sensitive assets and its interest-sensitive liabilities. What would happen to bank profits if interest rates were to fall by one percentage point? You should report your answers in terms of the change in profit per $100 in assets.

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.

Consider the following information of a bank's balance sheet: Reserves = $200 Reserve ratio = 0.25 Loans = $600 Debt = $340 Securities = $400 a) Write down the balance sheet and find the leverage ratio. b) If the bank's value of assets rises by 2%, what happens to the value of the owner's equity in the bank? c) How large would the decline in the value of stocks held in the bank need to be for the bank to go insolvent?