Assets Liabilities and Net WorthStock Shares $400    Res…

    Assets Liabilities and Net WorthStock Shares $400    Reserves 40    Property 300    Securities 160    Loans 80    Demand Deposits 180    The figures in the table are for a single commercial bank. All figures are in thousands of dollars. This bank has liabilities and net worth totaling

Suppose that, for every 1-percentage-point decline in the di…

Suppose that, for every 1-percentage-point decline in the discount rate, commercial banks collectively borrow an additional $2 billion from Federal Reserve Banks. Also assume that the reserve ratio is 10 percent. If the Fed lowers the discount rate from 4.0 percent to 3.5 percent, bank reserves will