The Fed buys $50,000 of government securities from Commerce Bank. The desired reserve ratio is 25 percent. What is the change in Commerce Bank's total reserves and its excess reserves?
What will be an ideal response?
When the Fed buys $50,000 of government securities from Commerce Bank, Commerce Bank's total reserves increase by $50,000. However, because Commerce Bank's deposits have not changed, none of these additional reserves are desired reserves, so Commerce Bank's excess reserves also increase by $50,000.
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After a depreciation of the home currency, what is the situation with a nation's external wealth?
A) It will rise if external liabilities exceed external assets. B) It will fall if external liabilities exceed external assets. C) It will rise if domestic liabilities exceed domestic assets. D) It will fall if domestic liabilities exceed domestic assets.
Which of the following is true?
a. Economic freedom is present if a country is a political democracy. b. Economic freedom ratings indicate the consistency of a nation's institutions and policies with personal choice, freedom of exchange, and protection of private property. c. Economies that are highly free tend to grow less rapidly than those with less economic freedom. d. All of the above are correct.