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Econ 202 - NelsonUnit 8 Assignment Name______Ryan Ingalls_________ I.The Bank of Nelson (BON) is a bank in the United States, with $18,000 cash in its vault, and $46,000 on deposit at the Federal Reserve (the Fed). The customers of the bank have on deposit $800,000 in checking accounts. The bank owns government securities worth $180,000 and has made loans totaling $600,000. The FED imposes a 8% required reserve ratio on this bank.A.Put the assets and liabilities of the BON into a balance sheet using the T-account at right.B.Calculate the bank’s C.By how much can this bank safely increase its loans? Explain!D.If the BON buys $10,000 of government securities from the Fed, 1.determine the immediate change in M1 and M2decrease them2.show the changesin the bank’s balance sheet 3.calculate the amount by which the bank can safely increase its loans 04.calculate the maximum possible change in total deposits in the banking system 0E.If the Fed reduces the required reserve ratio to 5%, 1.determine the immediate change in M1 and M2 increase them2.show the changesin the bank’s balance sheet doesn’t change balance sheet