1. Critical analysis Q6 Suppose you deposit $500 in your checking account at your bank, which has a required reserve ratio of 20%. Initially, as a result of your this transaction, the size of M1 will your bank by $ . Before any further actions by your bank, the reserves in by while the excess reserves of your bank

1. Critical analysis Q6 Suppose you deposit $500 in your checking account at your bank, which has a required reserve ratio of 20%. Initially, as a result of your this transaction, the size of M1 will your bank by $ . Before any further actions by your bank, the reserves in by while the excess reserves of your bank

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Suppose that in 2018 customers deposit $4,000 into their bank accounts. Based on the extended money multiplier calculated in part (1), calculate the total amount which the money supply in the banking system will eventually increase to. Show all steps involved in the calculation. part 1 answer DRR = Ratio (4% or 0.04) CDR = % of money in wallets (3% or 0.03) = (1 + 0.03) / (0.04 + 0.03) = 1.03 / 0.07 Answer = 14.71 Therefor Every $1 in the bank will allow the bank to create $14.71
Assuming that the cash held by the public drops to $5,000,000 with and equal amount becoming excess reserves and the required reserves ratio drops to 12 percent
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There is a reserve requirement of 25 percent in the United States. If the Federal Reserve makes an open market sale of $27 million, the money supply will Multiple Choice О increase by $675 million. о decrease by $108 million. C 1 ! increase by $108 million. decrease by $675 million. @ 62 Q 54 #3 Q W E A N S X D % 5 8 * 00 27 & R T Y U כ + - ) 9 0 0 P LL F G H J K L C V B N M
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18. Refer to Table 13.2. The required reserve ratio is 20%. If the First Charter Bank ismeeting its reserve requirement and has no excess reserves, its loans equal:a) $710b) $460c) $550d) $760
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7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. Hubert, a client of First Main Street Bank, deposits $500,000 into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 500,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Eileen, who immediately uses the funds to write a check to Clancy. Clancy…
2. Consider the following data (all values are in billions of dollars): (b) Currency Transactional deposits Bank reserves June 1930 June 1931 June 1932 $ 3.681 3.995 4.959 21.612 19.888 15.490 3.227 3.307 2.829 (a) Calculate the values for each period for the currency-deposit ratio, the ratio of total reserves to deposits, the monetary base, M1, and the money multiplier. Can you explain why the currency-deposit ratio and the ratio of total reserves to deposits moved as they did between 1930 and 1932(Great depression era)?
Consider an individual who immigrates to Canada and deposits $5,000 into the Canadian banking system. Suppose that all commercial banks have a target reserve ratio of 10 percent and that individuals do not hold any cash from the loans borrowed from the banking system. The eventual total change in deposits of the banking system after this impact is $ 50000. The eventual total change in reserves of the banking system after this impact is $ The eventual total change in loans of the banking system after this impact is $
a). Calculate excess reserves when required reserve ratio on demand deposit is 14% and required reserve ratio on time deposit is 3%. b). suppose that required reserve ratios are changed to 16% on demand deposits and 0% on time deposits. Calculate excess reserves c. suppose bank sells 3 million in securities on the open market. Calculate the change in the bank's excess reserves when the required reserve ratio on demand deposits is 14%