1. If the required reserve ratio is 20% and $10,000 of new money is printed, and deposited into the system, by the federalreserve. What is the minimum change to the money supply is?$8,000$40,000$10,000$18,000$50,0002. If the economy is experiencing a recession that would be considered, a negative, GDP gap.a)Trueb)3. In the US economy the money supply is controlled by the:a)Senate committee on Banking and Financeb)World Banc)Federal Reserve Systemd)e)4. Consumption accounts fora)b)c)d)e)a)b)c)US CongressUS Treasury Departmentd)False587020d)e)5. The group that sets the Federal Reserve System policy on buying and selling government securities is the:a)Federal Depository Insurance Corporationb)Federal Bond Sale Authorityc)Federal Open Market CommitteeFederal Organization of Monetary Authority48percent of total expenditures in the US economy.19

Required Reserve Ratio:The required reserve ratio is the proportion of a bank's total deposits that…

1. If the required reserve ratio is 20% and $10,000 of new money is printed, and deposited into the system, by the federal reserve. What is the minimum change to the money supply is? a) $8,000 b) $40,000 c) $10,000 d) $18,000 $50,000 D

1. If the required reserve ratio is 20% and $10,000 of new money is printed, and deposited into the system, by the federal reserve. What is the minimum change to the money supply is? a) $8,000 b) $40,000 c) $10,000 d) $18,000 $50,000 D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Transaction One: Open a Bank and Accept Deposits Name your Bank Draw a T-Account Representing Deposits of $2 million Transaction Two: Grant a Loan The Reserve Requirement is 20% Customer A wants to borrow $1 million. Customer B wants to borrow $400,000. Customer C wants to borrow $300,000. Can you fulfill all three loan requests? Draw a T-Account Representing a bank that is fully “loaned up” (reduce the loan amount to Customer C if necessary) Transaction Three: Follow the Money Creation Process Customer A deposits his loan with his home bank, Bank of Taylor Draw a T-Account Representing this transaction for Bank of Taylor assuming they already have $1.5 million in deposits and loans in the amount of $700,000 Transaction Four: Calculate the Money Creation Effect What is the money multiplier rate in this example? If banks in this economy are always fully loaned up, calculate how much money was created in this economy from the original three loans made by your bank (the amount that…
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11) Which of the following increases the quantity of money? A) an individual's cash withdrawal from a bank B) an individual's purchase of a government security from the Fed C) the Fed's purchase of a government security D) an increase in the government's budget deficit 12) Open market purchases by the Federal Reserve System (the Fed) A) raise the federal funds rate. B) increase bank reserves. C) occur when the Fed wants to decrease the quantity of money. D) All of the above answers are correct. 13) When the Fed raises the federal funds rate, A) net exports increase. B) the value of the dollar falls on the foreign exchange market. C) the value of the dollar rises on the foreign exchange market. D) consumption increases. 14) If the Fed raises the federal funds rate so that the exchange rate rises, then imports ________ and exports ________. A) increase; increase B) increase; decrease C) decrease; increase D)…
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Part 2 hand written plzz The Federal Reserve sells $26.00 million in Treasury securities. If the required reserve ratio is 10.00%, and all currency is deposited into the banking system, and banks hold excess reserves of 10%, then the maximum amount the money supply can decrease is $ million. (Insert your answer in millions, and round your answer to two decimal places.)
If $50,000 is deposited in a bank operating in a banking system that has a reserve requirement of 10%, how much total money would be available to be loaned out by the entire banking system as a result of the banking multiplier? a) $5,000 b) $50,000 c) $450,000 d) $500,000
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(Module 25) Suppose the First Bank of Burgin knows that the Central Bank has specified a required reserve ratio of 10%. Currently the bank has $1,000,000 in cash reserves. a. If the bank is holding no excess reserve cash, what are total deposits at the First Bank of Burgin? Explain. b. Suppose Sandra finds $2000 in her sofa and deposits the money at the bank. If the First Bank of Burgin holds no excess reserves, how much can the bank lend and how much cash must the bank hold in required reserves? c. At most how much will Sandra's deposit increase the money supply? d. Suppose the Federal Reserve conducts expansionary OMO using the First Bank of Burgin. i. How will the Federal Reserve inject the money into the system? ii. Will OMO have any effect on the required reserves of the first bank? e. Draw a correctly labeled graph of the money market and show the effect of the monetary policy action identified in part (d) on the equilibrium nominal interest rate. f. Based on the change in the…
The average vault cash for the computation period has been estimated to be $1 million per day.a. What level of average daily reserves is required to be held by the bank during the maintenance period, May 11 – 24?b. Is the bank in compliance with the requirements?c. What amount of required reserves can be carried over to the following computation period?d. If the average cost of funds to the bank is 8 percent per year and deposits at the Fed pay 0.5 percent, what is the effect on the income statement for this bank for this reserve period?