70.2K

Verified Solution

Link Copied!

(a) At the start of October 1, 2020, determine the amount of Bank of Upland's Total Reserves which

can legally be loaned out (please show/ explain how you got your answer.

(h) Calculate the Bank of Upland's Money Creating Potential throughout the entire Banking System

at the start of October 1, 2020 (please show/explain how you got your answer).

(el During October 1, 2020 only one transaction takes place at the Bank of Upland. This one

transaction is the Federal Reserve SELLS $80 million worth of Treasury Bonds to the Bank of

Upland.

Based on the Federal Reserve SELLING $80 millionIworth of Treasury Bonds describe all the

changes this SALE will have on this balance sheet for the Bank of Upland. State which assets

and/or liabilities will change (increase or decrease) and state the numeric value of the increase or

decrease. Also state any change in the Total Assets number of $1000 million and the Total

Liabilities number of $1000 million.

(d) Determine the arount of Bank of Upland's Total Reserves which can legally be loaned out as of

October 2, 2020. Please show/explain how you got your answer.

(e) Calculate the Bank of Upland's Money Creating Potential throughout the entire Banking System

as of October 2, 2020 (please show/explain how you got your answer).

(A) Explain the reason the Federal Reserve would SELL these T-bonds to the Bank of Upland and

explain what the Federal Reserve is worried about. (In other words, what economic condition is the

Fed trying to avold and how would the bord SALE help the Fed to avoid this ecanomic condition.)

Make sure to use your answers to (b) and (e) in your answer here.

Below is the balance sheet for the Bank of Upland at the start of business on October 1, 2020. The required reserve ratio is 4%. Based on this information, in your own words, answer the questions below. Bank of Upland Assets Liabilities $180 million Car Loans $1000 million Ddmand Deposits $520 million Treasury Bonds $40 million Vault Cash $120 million Business Loans $30 million Credit Card Loans $30 million on Deposit with the Fed $80 million Mortgages $1000 million Total Assets $1000 million Total Liabilities

Answer & Explanation Solved by verified expert

See Answer