Quiz_ Practice Exam 6

(a). The required reserve ratio is 10%. If the Fed increases the amount of excess reserves in the banking system by $100,000,000, the maximum potential amount of additional money created in the economy will be dollars. (b). The required reserve ratio is 10%, but due to economic uncertainty, banks are holding an additional 2.5% of their deposits as excess reserves. If the Fed increases the amount of excess reserves in the banking system by $100,000,000 through an open market purchase, the maximum potential amount of additional money created in the economy will be dollars.

I only need Help with part (B)

Question 3 (a) Distinguish between legally required reserves and excess reserves. (b) Why don’t banks hold a100 percent reserves? How is the amount of reserves bank hold related to the amount of money the banking system creates? Assume that Lucky Bank is required to hold a10% deposits as reserves, and there is a $3000 increase in demand deposits. Calculate the money multiplier? How much additional new demand deposits could the $3,000 deposit support?

11. Macroland has a very simple banking system, in which there is only one chartered bank (The First Bank). The government of Macroland imposes a minimum required reserve ratio of 3%. Individuals in Macroland hold a fixed amount of $1200 in the form cash to facilitate their daily transactions and will deposit any excess amount of money into their bank accounts. The initial balance sheet of the First Bank is as follows: Assets Liabilities & Equity Reserves $255 Chequable deposits $7500 Loans $7400 Shareholder equity $155 Note: Unless otherwise stated, the First Bank will hold the excess reserves fixed at the current level as shown in the initial balance sheet and will lend out any surplus of reserves beyond this. a. Find the required reserves and the excess reserves held by the First Bank. b. Suppose there is a change in money demand such that people increase their cash holdings by $45 by withdrawing cash from their bank accounts. By how much will the money supply change? c. Return to…

Learning Activity 9.3 Question 3 (a) What are the functions of money? (b) There were three tools discussed in this session that are used by central banks to affect the money supply. However, not all central bank uses all three. Find out what tools are used by the central bank in your region to affect the money supply

(a) What are the functions of money? (b) There were three tools discussed in this session that are used by central banks to affect the money supply. However, not all central bank uses all three. Find out what tools are used by the central bank in your region to affect the money supply

24. Assuming the required reserve ratio is 10%, how much can this bank lend? a) $200,000 b) $300,000 c) $400,000 d) $550,000 e) $3,000,000

(b) Not all central bank uses all three. Find out what tools are used by the central bank in your region to affect the money supply

Exhibit: Deposit Expansion Stages What is the required reserve ratio? Group of answer choices  1) 5% 2) 10%  3) 20% 4)25%.

Question B

Assume that a bank has demand deposits of $25,000.  If the legal reserve requirement is 15% then the bank’s required reserves are?   Question 29 options:   a)  $21,250   b)  $15,000   c)  $3750   d)  $25,000

QUESTION 31 LAST CHANCE BANK OF TOMBSTONE ASSETS cash in the vault: deposits at Fed US treasury bonds: loans: Building: TOTALS: BALANCE SHEET LIABILITIES & $900,000 demand deposits: $100,000 $300,000 $3,700,000 $2,000,000 capital stock: $7,000,000 TOTALS: 31. If the required reserve ratio is 5%, what is the level of excess reserves this bank holds? a) $900,000 b) $1,000,000 c) $750,000 d) $500,000 e) $400,000 NET WORTH $5,000,000 $2,000,000 $7,000,000

A5

B3-4 ALL QUESTIONS GO WITH GRAPH 1. What would be the level of excess reserves if the required reserve ratio were 20%?     a) There would be a shortfall in required reserves of $100,000     b) 0     c) $300,000     d) $900,000     e) $1,000,000 2. If the reserve required ratio is 10%, how much can this bank lend?     a) $900,000     b) $1,000,000     c) $1,300,000     d) $500,000     e) $400,000   3. Assume: a required reserve ratio of 10%, this bank is the only one with excess reserves, banks do not wish to hold excess reserves and the public does not wish to increase its cash holdings. What is the maximum amount of new money the banking system can create?     a) $900,000     b) $500,000     c) $400,000     d) $4,000,000     e) $5,000,000

Given an initial deposit of $30,000 and a legal reserve requirement of 15%, what is the amount of money potentially created by the banking system?   Question 31 options:   a)  $170,000   b)  $200,000   c)  $4500   d)  $34,500

39. Consider a fractional-reserve banking system in which an initial deposit of $1,000 can generate up to $4,000 in money. What is the reserve ratio? (A) 4 percent. (B) 5 percent. (C) 25 percent. (D) 75 percent.

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Calculate the Required Reserves given the following information. rr = .11 Total Deposits: $7200 Total Reserves: $3500 Instructions: Whole numbers only. No margin for error

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Can you all help me with the solution?

Solve both as they are subparts Give explanation of the correct option and explanation of incorrect options will like solve both please.

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Calculate Total Potential Deposit Creation given the following information. rr = ,12 Total Deposits: $6300 Total Reserves: $5500 Instructions: Please calculate to two decimal points. The margin of error is 0.10. do not use the $ sign in your answer