Securities in the market, Shadow Bank 411 buys $3 million

Securities in the market

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Reference no: EM136634

Q1. Consider the supply curve Qs = 4P. What happens to the price elasticity of supply along the curve as the quantity increases?

Q2. Show the following changes in your T accounts:
Bank 411 "loses" $3 million of its checking deposits and to money market accounts at Shadow Bank 411
i. Assume Shadow Bank 411 has a "checking account" at Bank 411
Shadow Bank 411 buys $3 million more securities in the market and "pays" for them with its account at Bank 411. Bank 411 borrows $3 million more as a first response.

Reference no: EM136634

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