Suppose a banking system with the following balance sheet has no excess reserves. Assume that banks will make loans in the full amount of any excess reserves that they acquire and will immediately be able to eliminate loans from their portfolio to cover inadequate reserves. Instructions: In part a, enter your response as a percentage rounded to one decimal place. For all other parts, enter your responses as a whole number. a. What is the reserve requirement? % b. Suppose the reserve requirement is changed to 5 percent. Reconstruct the balance sheet of the total banking system after all banks have fully utilized their lending capacity. c. By how much has the money supply changed as a result of the lower reserve requirement (step b)? $ billion d. Now suppose the Fed buys $30 billion of securities directly from the banks. What will the banks’ books look like immediately after this purchase but before the banks make any additional loans? e. How much excess reserves do the banks have now? $ billion f. By how much can the money supply now increase? $ billion

Beta coefficients and the capital asset pricing model personal finance problem katherine wilson is wondering how much risk she must undertake to generate an acceptable return on her porfolio. the risk-free return currently is 4%. the return on the overall stock market is 14%. use the capm to calculate how high the beta coefficient of katherine's portfolio would have to be to achieve a portfolio return of 16%.

Aprice ceiling is “binding” if the price ceiling is set below the equilibrium price. suppose that the equilibrium price is $5. if a price ceiling is set at $6, this will not affect the market in any way since $5 remains a legally allowable price (since $5 < $6). a price ceiling of $6 is called a “non-binding” price ceiling. on the other hand, if the price ceiling is set at $4, the price ceiling is “binding” because the natural equilibrium price is $5 but that is no longer allowed. what happens when there is a binding price ceiling? at a price below the equilibrium price, quantity demanded exceeds quantity supplied. there is a shortage. normally, price increases eliminate shortages by increasing quantity supplied and decreasing quantity demanded. in this case, however, price increases are not allowed past the price ceiling. we therefore predict that the observed market price will be right at the price ceiling and there will be a permanent shortage. the observed quantity bought and sold will be dictated by the quantity supplied at the price ceiling. although consumers would like to buy more, there are no more units for sale

Dan wants to start a supermarket in his hometown, and wants to get into the business only after finding out about the market and how successful his business might be. the best way for dan to gain knowledge is to: