The table shows a bank balance sheet. The bank has no excess reserves and there is no currency drain. Suppose the bank sells $5 million of govt securities to the central bank in an open market operation.
1.As soon as the sell happens the bank can create $______ million of new money.
2. The total quantity of new money created when the bank has no excess reserves is $_______ million.
Table:
Assets:
Reserves of the Fed $35 mil
Cash in vault $20 mil
Securities $50 mil
Loans $90 mil
Liabilities
Check able deposits $120 mil
Savings deposits $75 mil
The table shows a bank balance sheet. The bank has no excess reserves and there is no currency drain. Suppose the bank sells $5 million of govt securities to the central bank in an open market operation. 1.As soon as the sell happens the bank can create $______ million of new money....
