a. 2More on Money Creation Systemi.e. there is cash drainage e. injection of s6,ooo? b. In a., what is the value of themoney multiplier? deposited back into the banking system. not exceed this level. .Money Creation by Banks answers in groups of not more than three, and to hand in joint work. ASSIGNMENT8 and improvements,chocse Check for Updates If the reserve ratio of a bank falls below the level required by the Fedit may borrow cash from the Fed at Indicate which of the following statements are true and which are false;if falseexplain why In e., what is the value of the money multiplier? (Follows straight forwardly from g.] In e., after all rounds, how much additional money will have been created? [Hard.] In e. after three rounds, how much additional money is there in the economy? Now repeat a., but assume that only 8oof the value ofthe bank loans is redeposited in the banking In a after all rounds,howmuch aditional money wil have been created? In aafter three rounds, how much additionalmoney is there in the economy (including the intial first three rounds of transactions. Assume that when the bank lends moneyall of this money is On a series of balance sheets i.e.showing bank assets,and liabilities and net worth, trace through the The Fed injects an extra s6,ooo into the economy,by buying some bonds from you that you no longer want to
