Econ 201-01: Third Homework Assignment - Banking Problem Answers

This document presents the solutions to the third homework assignment for Econ 201-01, focusing on a banking problem. The assignment involves analyzing the impact of changes in the required reserve ratio, discount rate, and open market operations on the money supply, bank deposits, and interest rates using the SimEcon platform. The solution examines the overall system's response to these changes, explaining the shifts in money supply and interest rates with reference to the money market graph. It also compares the performance of high-risk and low-risk banks, highlighting the differences in capital gains and losses due to varying levels of risk exposure. The analysis further explores the effects of altering the discount rate and conducting open market operations, providing numerical results and explanations for each scenario. The document includes references to support the analysis.