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PS5-f09 - nation’s money supply 3 Suppose the FOMC sells...

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1. Will finds $100 under a rock and deposits it in ABC Bank. Assuming that ABC holds 20 percent of deposits in reserve, show the impact of this transaction on ABC Bank’s balance sheet. 2. Assuming all banks hold 20 percent of their deposits in reserve and that there are no leakages from the system, what is the impact of Will’s discovery on the
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Unformatted text preview: nation’s money supply? 3. Suppose the FOMC sells $10 billion in securities to ABC Bank. a. Show the impact on United Megabucks’ balance sheet b. Show the impact on the overall money supply if the required reserve ratio is 20%. c. Trace the impact of the policy in #3 on the macroeconomy in the short run....
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