If a bank has $10,000,000 in deposits, excess reserves of $5,000,000, and required reserves of $800,000, Instructions: In Part a, round your response (in millions) to one decimal place. In Part b, enter your response as a whole number. what are its total reserves? $ ____million what is the required reserve ratio? ____ % 2.) Answer two questions about the money multiplier. Instructions: Round your responses to two decimal places. What is the value of the money multiplier when the required reserve ratio is 0.10? _____ If the required reserve ratio incre
1.) If a bank has $10,000,000 in deposits, excess reserves of $5,000,000, and
Instructions: In Part a, round your response (in millions) to one decimal place. In Part b, enter your response as a whole number.
what are its total reserves?
$ ____million
what is the
____ %
2.) Answer two questions about the money multiplier.
Instructions: Round your responses to two decimal places.
What is the value of the money multiplier when the required reserve ratio is 0.10?
_____
If the required reserve ratio increases to 0.15, what happens to the money multiplier?
It changes to ___ .
Given information
Deposits with bank= $10,000,000
Excess reserves = $5,000,000
Required reserves of $800,000
Required reserves refer to the minimum amount of funds that a bank is legally required to hold in reserve, either as cash in its vault or as deposits with the central bank.
Excess reserves are funds that a bank holds in excess of the amount required by the central bank. These reserves are above and beyond what the bank is required to hold in reserve to meet its obligations to depositors.
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