Excel Problem: For this problem, you must calculate your answer using excel. You

Question

Excel Problem: For this problem, you must calculate your answer using excel.  You must ALSO display the required balance sheets in excel and upload the spreadsheet. 9. Suppose that the required reserve ratio is 6.25%. If the Fed sells $350 million of bonds to the First National Bank.  What happens to reserves and the monetary base?  What will happen to the money supply?  Show the changes in First National Bank’s balance sheet, The Federal Reserve’s balance sheet, and the collective banking system’s balance sheet.

Explanation / Answer

Here i present the balance sheet of both banks. That is,

Here fed Sells $350 Million to first national bank. Then Balance sheet of first national bank is,

Notes: Here (-) means decrease and (+) Means increase

Federal reserve system

Collective banking system

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