Question

Yu arrives in Halifax to pursue an undergraduate degree at St. Mary’s and opens a chequing account with RBC Bank with the $1,000 cash she brought with her from China.

a. Show this initial transaction on RBC’s balance sheet.

b. Suppose RBC has a target reserve ratio of 1% and it decides to make loans because of the transaction in (a). By how much has money supply increased because of (a) and (b) combined?

c. Assume all banks in the Canadian banking system have the same target reserve ratio as RBC. After infinite rounds of deposits and lending, by how much has money supply increased as a result of Yu opening a chequing account?

d. What would be the possible change in money supply if we also had to consider a cash drain (leakage) of 4%?

Answer 1

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OPPORTUNITIES Customer base concentrated in South of Brazil Growing disposable income of the population Growing usage of internet among customers. Increasing aspirations of population Large number of soccer lovers in Brazil Economic growth in Brazil	THREAT Language and cultural barrier in expansion Recreate itself in new market Lack of human capital Fast paced change in technology Culture of mistrust among consumers for purchasing online.