T - account of the banking system - equilibrium, Financial Management

Suppose that the Fed buys $1 million of bonds from the First National Bank. If the First National Bank and all other banks use the resulting increase in reserves to purchases bonds from the public and not to make loans. The public deposit the revenue from selling bonds in their checking account. What will the T-account of the banking system look like when the banking system is in equilibrium? What will happen to checkable deposits? We assume that

(a) the required reserve ratio on checkable deposits is 10%,

(b) banks do not hold any excess reserves, and

(c) the public's holdings of currency do not change.

Posted Date: 3/20/2013 1:54:37 AM | Location : United States







Related Discussions:- T - account of the banking system - equilibrium, Assignment Help, Ask Question on T - account of the banking system - equilibrium, Get Answer, Expert's Help, T - account of the banking system - equilibrium Discussions

Write discussion on T - account of the banking system - equilibrium
Your posts are moderated
Related Questions
List a few types of non-price rationing systems. (a) Queuing. (b) Favored customers. (c) Rationing coupons.

Discuss how a business might limit agency problem between management and creditors

Who owns a credit union? Explain. Credit unions are owned by their members.  When credit union members place money in their credit union, they aren't technically "depositing"

Does is make any sense to calculate betas against local indexes when a company has a great part of its operations outside this local market? Both the betas calculated against l

Normal 0 false false false EN-IN X-NONE X-NONE MicrosoftInternetExplorer4

Following are the details relating to three companies which are identical in terms of ''r'' ABC ltd MNC ltd XYZ ltd Cost of capital

A vailable bid capacity We saw the criterion that qualifies the bidder. Now we will learn about the bid capacity. There are chances that a bidder might acquire more contrac

Determine the Significance of gearing on shareholders Significance of gearing on shareholders is financial risk for anun-geared and geared company. It means that there is a gre

Q. Trouble in Determination of Cost of Capital? Trouble in Determination of Cost of Capital:- 1. Historic Cost as well as Future Cost: - One main problem in the determinatio

Working of ASIC ASIC as an independent government body enforces and regulates company and financial services laws to protect consumers, investors and creditors. It keeps the pu