##### Reference no: EM13150134

1.Continue working with the information about Columbia.

Calculate the desired excess reserves ratio for Columbia, noting that this is an economy-wide variable (so use information from both banks).

**Enter only numbers, a decimal point, and a negative sign as needed. Do not convert your answer into a percent. Round your final answer to three decimal places.**

2.Continue working with the information about Columbia.

Based on Bank A's reserves, calculate the maximum amount of money that all banks in the banking system for Columbia can create (the fact that there are only two banks will not affect your answer).

**Enter only numbers, a decimal point, and a negative sign as needed. Round your answer to the nearest penny.**

3.Continue working with the information about Columbia.

Now let's say that the central bank of Columbia decides to do $300 in easy open market operations **with Bank A only**. After this open market operation is complete, calculate the maximum amount of money that Bank A can create **on its own.**

Enter only numbers, a decimal point, and a negative sign as needed. **Round your final answer to the nearest penny.**

4.Continue working with the information about Columbia.

After the open market operation transaction is complete, calculate the maximum amount of money that the whole banking system, working together, can now create, based on Bank A's reserves.

**Enter only numbers, a decimal point, and a negative sign as needed. Round your final answer to the nearest penny.**

5. **Note the special directions for this question.**

Consider an economy in which households spend 81% of each additional dollar of income. If the government increases taxes by $5960, what will the overall effect be on output/income?

**Enter your answer rounded to the nearest penny, including only numbers, a decimal point, and/or a negative sign if needed. Round any intermediate steps to four decimal places. Enter a positive number for an increase and a negative number for a decrease.**