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What is the dollar amount of excess reserves

Assignment Help Macroeconomics
Reference no: EM13134503

1. Economists have announced that the country is experiencing aninflationary gap. What economic symptoms or indicators would make the economists draw this conclusion? At this point does AE exceed AO or fall below it?

2. Name and explain two MONETARY policy tools the Bank of Canada can use to close the gap you identified above.

3. Use the figures in the table below to answer the following questions.

 

$ Billions

 

Personal savings deposits at chartered banks

215

 

Currency held outside of chartered banks

80

 

Non-personal notice deposits at chartered banks

400

 

Deposits at non-bank deposit taking institutions

200

 

Money-market mutual funds

75

 

Life insurance annuities

40

 

Demand deposits in chartered banks

150

 

Canada Savings Bonds

5

 

Non-money-market mutual funds

500

 

a) What is the value of M1?

b) What is the value of M2?

c) What is the value of M2+?

d) What is the value of M2++?

4. Answer the following questions using the information below.Assume the desired reserve ratio is 33%.

Balance Sheet Chartered Bank AAA

 

Assets

 

Liabilities

 

Reserves

$60,000

  Demand Deposits

$150,000

Loans

60,000

  Capital Stock

300,000

Securities

40,000

 

 

Property

290,000

 

 

 

 

 

 

Total Assets

450,000

Total Liabilities

450,000

a) What is the dollar amount of excess reserves?

b) By what dollar amount can this bank safely expand its loans?

c) By expanding its loans by the amount in part (b), what would its demand deposits equal (if all loans were made to customers holding demand deposits)?

Reference no: EM13134503

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