Money Banking Financial Markets and Institutions Worksheet

Money Banking Financial Markets and Institutions Worksheet

Instructions/Descriptions

Money Banking Financial Markets and Institutions Worksheet

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Supply and Demand Essay

The attachment contains two articles written about a week apart on Crude Oil June Futures. You do not need to know anything else about the oil market than what is included in these articles. But be sure you are familiar with the concepts including, but not limited to, demand, supply, markets, opportunity costs, and monopolistic power. Answer the following questions:

1. In a structured paragraph or two, argue that changes in demand are the main reason why crude oil future prices have collapsed.
2. In a structured paragraph or two, argue that changes in supply are the main reason why crude oil future prices have collapsed.

Money Banking Financial Markets and Institutions Worksheet

Assume that all banks in the banking system are initially “fully loaned up”, and that the Required Reserve Ratio is 20%.

1. a) If the Fed sells $1000 of bonds on the open market, how will your answers to both 1d) and 1e) Ruediger to assume that the Required Reserve Ratio = 20%.

If the Federal Reserve buys $500 on the open market, and the money they paid is deposited in Bank Ruediger and illustrate the impact of the Fed’s purchase on Bank A’s balance sheet below:

Calculate Bank A’s excess reserves. Explain and/or show your work.

How many new loans can Bank A make? Assuming that Bank A makes these loans and the money is deposited in Bank B, show the impact of the loan, and subsequent deposit, on the balance sheets of Bank A and Bank B, below:

By how much will the reserves of the banking system change as a result of the Fed’s purchase above? Using the money multiplier, calculate the total change in deposits (and loans) for the banking system as a whole. Explain and show your work.

Illustrate your answer in the t-account for the banking system as a whole below:

BANK A BALANCE SHEET

ASSETS LIABILITIES

BANK A BALANCE SHEET

ASSETSLIABILITIES

BANK B BALANCE SHEET

ASSETS LIABILITIES

ECN 111 – Module 6: Worksheet Assignment for Video 6.2

PAGE 2

BANKING SYSTEM BALANCE SHEET

ASSETS LIABILITIES

1. b) Illustrate your answers to 2a) in the t-account for the banking system as a whole below. You do not need to show t-accounts for Banks A & B.

BANKING SYSTEM BALANCE SHEET

ASSETS LIABILITIES

Money Banking Financial Markets and Institutions Worksheet

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