1.Answer each of the following questions.a. Bank reserves are 100, the public holds 200 in currency, and the desired reserve-depositratio is 0.25. Find deposits and the money supply.b. The money supply is 500 and currency held by the public equais bank reserves. Thedesired reserve-deposit ratio is 0.25. Find currency held by the public and bank reserves.c. The money supply is 1.250, of which 250 is currency held by the public. Bank reservesare 100. Find the desired teserve-deposit ratio.

Money supply: The amount of currency circulating in an economy is stated as the money supply. The…

1. Answer each of the following questions. a Bank reserves are 100, the public holds 200 in currency, and the desired reserve-deposit ratio is 0.25. Find deposits and the money supply. b. The money supply is 500 and currency held by the public equals bank reserves. The desired reserve-deposit ratio is 0.25. Find currency held by the public and bank 1eserves. c The money supply is 1.250, of which 250 is currency held by the public. Bank reserves are 100. Find the desired reserve-deposit ratio.

1. Answer each of the following questions. a Bank reserves are 100, the public holds 200 in currency, and the desired reserve-deposit ratio is 0.25. Find deposits and the money supply. b. The money supply is 500 and currency held by the public equals bank reserves. The desired reserve-deposit ratio is 0.25. Find currency held by the public and bank 1eserves. c The money supply is 1.250, of which 250 is currency held by the public. Bank reserves are 100. Find the desired reserve-deposit ratio.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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I’m confused on all three please help!
1.What is the money multiplier if the target reserve ratio ofbanks is 4%? 2. If the target reserve ratio for a bank is 5%, deposits are $1billion, and loans are $800 million, what are the targetreserves?$50 million•80%$40 million$200 million3. Which measurement of the money in Canada will be the largest? 4. Is there more money or currency in Canada?5.
8. When the interest on reserve balances rate is higher than the federal funds rate, banks can a. lend at the interest rate on reserve balances rate and borrow at the federal funds rate, earning a profit on the difference. b. borrow at the federal funds rate and deposit at the interest on reserve balances rate, earning a profit on the difference. c. lend at the federal funds rate and borrow at the interest on reserve balance rate, earning a profit on the difference. d. borrow at the interest on reserve balances rate and deposit at the federal funds rate, earning a profit on the difference.
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B. In the economy of Nocoin, Bank deposits are $300 billion, bank reserves are $15 billion of which two-thirds are deposits with the central bank. Households and firms hold $30 billion in bank notes. There are no coins. Calculate: i. The monetary base and quantity of money. ii. The banks' desired reserve ratio and the currency drain ratio (as percentage).
2. Problems and Applications Q2 If the Fed wants to increase the money supply, it can If the Fed wants to decrease the money supply, it can If the Fed wants to increase the money supply, it can bonds in open-market operations. the reserve requirement. the interest rate it pays on reserves. When the FOMC decreases its target for the federal funds rate, the money supply will If people decide to hold less currency after a rash of pickpocketing, the money supply
n the table below, the money supply, defined by M3, is equal to ........ Currency held by the non-bank public ($ billion) Current deposits at banks ($, billion) Other deposits at banks and other deposits held by other deposit -taking institutions ($, billion) 60 240 1500 Select one: a. 1200 billion b. 1800 billion c. 1500 billion d. 1740 billion
But which event will increase the quantity of deposits the banking system can create? A. An increase in the monetary base B. An increase in the currency drain C. An increase in the desired reserves by banks
In an economy, the banks prefer to keep 25% of their deposits in reserve. The population likes to keep their currency holdings equal to 10% of the deposits. Initially, there was zero money in the economy. Then the central bank buys $120 worth of T-bills from a household. The household receives $120 on its checking account. 1. the commercial bank formed reserves and gave out a loan. The population allocated the lent funds between the currency in pockets and checkable accounts. Before anything else happens, how much money is there in the economy at the end of Round 1? ANSWER: 288 For question 1 How is this answer obtained?, How would you solve question 2. 2. In Round 2, more lending, borrowing, and reserve formation takes place. How much is in DEPOSITS in the economy at the end of Round 2?
3 4 Open market operations are the buying and selling of government securities by the Central Bank buying and selling of Central Bank credit notes in the open market. None of the options provided means by which the Central Bank supplies the economy with base money The money demand curve shows the inverse; the interest rate direct; GDP. inverse; GDP direct; the interest rate relationship between the quantity demanded of money and
Pls help with below homework.
i. If the banks hold no excess reserves, compute their desired reserve ratio ii. Assume household and firm hold USD 30 billion in the bank notes and there are no coins. Calculate the currency drain ratio. iii. Calculate the ZAP money multiplier.