Consider the balance sheet for the Wahoo bank as presented
Wahoo Bank Balance Sheet
Using a required reserve ratio of 10% and assuming that the bank
keeps no excess reserves, write the changes to the balance sheet
for each of the following scenarios:
Bennett withdraws $500 from his checking account.
The Fed buys $1,000 in government securities from the
4) Using a required reserve ratio of 10% and assuming that banks
keep no excess reserves, which of the following scenarios produces
a larger increase in the money supply, explain why.
a) Someone takes $1000 from under his
or her mattress and deposits it into a checking account.
b) The Fed purchases $1,000 in
government securities from a commercial bank