Consider an individual who immigrates to Canada and deposits
$1 comma 0001,000
in Canadian currency into the Canadian banking system. Suppose all commercial banks have a target reserve ratio of
55
percent and individuals choose to hold cash equal to
55
percent of their bank deposits.
Part 2
a. The eventual total change in deposits is equal to
1/(v
+
c)
times the new deposit, where v is the target reserve ratio and c is the ratio of cash to
deposits.
In this case, the eventual total change in deposits is
$enter your response here.
(Round your response to the nearest dollar.)
Part 3
b. Using the same numbers, the eventual total change in reserves is
$enter your response here.
(Round your response to the nearest dollar.)
Part 4
c. Again using the same case, the eventual total change in loans is
$enter your response here.
(Round your response to the nearest dollar.)