The following table shows the assets and liabilities of all banks in Canada. The reserve ratio is 8%, and no one holds cash. Assets Liabilities Actual reserves: $200 million Deposits: $1 000 million Loans: $700 million Bonds: $100 million a) What is the amount of total desired reserves? What is the amount of excess reserves? b) What is the multiplier? Show how you figured it out. c) After all the multiplier processes have taken place, what will be the change in loans?

The following table shows the assets and liabilities of all banks in Canada. The reserve ratio is 8%, and no one holds cash. Assets Liabilities Actual reserves: $200 million Deposits: $1 000 million Loans: $700 million Bonds: $100 million a) What is the amount of total desired reserves? What is the amount of excess reserves? b) What is the multiplier? Show how you figured it out. c) After all the multiplier processes have taken place, what will be the change in loans?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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