1. If there is no one who is interested in borrowing from a bank, the bank's excess reserves will be zero the entire bank system will collapse there will be no process of money creation O the Fed would have to raise the discount rate to encourage more borrowing

1. If there is no one who is interested in borrowing from a bank, the bank's excess reserves will be zero the entire bank system will collapse there will be no process of money creation O the Fed would have to raise the discount rate to encourage more borrowing

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter27: Money And Banking

Section: Chapter Questions

Problem 31P: Humongous Bank is the only bank in the economy. The people in this economy have 20 million in money,...

See similar textbooks

Similar questions

1. You deposit $100 of currency into your account. Explain what happens to reserves , checkabledeposits, and monetary base? 2. Explain what the shadow banking system is and how it works. 3. Your bank has the following balance sheet:Assets LiabilitiesReserves $70 million Checkable deposits $200 millionSecurities $50 millionLoans $130 million Bank capital $50 millionIf the required reserve ratio is 10%, what actions should the bank manager take if there is anunexpected deposit outflow of $50 million? Explain your answer. 4. Explain and demonstrate graphically that if the central bank pursues targeting a monetaryaggregate, it is likely to lose control over the interest rate. 5. In the market for reserves, the federal funds rate is equal to the interest rate paid on excessreserves. Explain and demonstrate graphically the effect of an open market sale on the federalfunds rate.
The table shows the commercial banks' balance sheet (aggregated over all the banks). The commercial banks' desired reserve ratio on all deposits is 5 percent and there is no currency drain. Question Help Calculate the bank's excess reserves. Assets >>> Answer to 2 decimal places. Liabilities (millions of dollars) Reserves at the Fed 20 The banks' excess reserves are $ Checkable deposits 120 million. Cash in vault 15, Savings deposits Securities 90 65 Loans 110 Enter your answer in the answer box and then click Check Answer. ? 2 parts remaining Clear All Check Answer MacBook Air DII DD F12 888 F11 F10 F7 F8 F9 F5 F6 F4 esc F2 F3 F1 & # $ % delete %3D ! @ 6. 8. 4 1 2 Y Q W E tab J K F G A S caps lock N M V shift option command I T
A bank has deposits of 400. It holds reserves of 50. It has purchased government bonds worth 70. It has made loans of 500. Set up a T-account balance sheet for the bank, with assets and liabilities, and calculate the banks net worth.
Humongous Bank is the only bank in the economy.The people in this economy have $20 million in money,and they deposit all their money in Humongous Bank.a. Humongous Bank decides on a policy of holding100% reserves. Draw a T-account for the bank.b. Humongous Bank is required to hold 5% of itsexisting $20 million as reserves, and to loan outthe rest. Draw a T-account for the bank after ithas made its first round of loans.c. Assume that Humongous bank is part of amultibank system. How much will money supplyincrease with that original $19 million loan?
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 44Deposits 255Loans 155 Securities 51Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 6%(Give answers to 2 decimal places as needed)
2
BALANCE SHEET OF BANK A (S IN MILLIONS) ASSETS LIABILITIES and NET WORTH Reserves (Cash/Reserves at Fed) 550 Demand Deposits $100 Losns 20 Govt. Securities 90 Net Worth (Owners' Equity) What is the net worth of this bank? 2. If the required reserve is 10%, what is the amount of REQUIRED RESERVES that this bank must bold? 3. What then is the mount of EXCESS RESERVES that this bank is now holding? How much does this bank have available for NEW LOANS? 5. If the required reserve is increased to 20%, whal is the amount of REQUIRED RESERVES that this bank must bold?
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 32Deposits 205Loans 150 Securities 53Other $X Using the balance sheet above, find the level of required reserves for this bank if the required reserve ratio = 8%(Give answers to 2 decimal places as needed)
What happens in a fractional reserve banking system? A. Bank panics cannot occur b. The monetary system just be backed by good c. Banks can create money through the lending process d. The federal reserve has no control over the amount of money in circulation
K The table shows the commercial banks' balance sheet (aggregated over all the banks). The commercial banks' desired reserve ratio on all deposits is 10 percent and there is no currency drain. What is the quantity of loans and the quantity of total deposits when the banks have no excess reserves? >>> Answer to 2 decimal places. Fed Cash in vault Securities Loans The total quantity of loans after the banks have lent all their excess million. reserves is $ Assets Liabilities (millions of dollars) Reserves at the 3588 60 90 30 Checkable deposits 80 Savings deposits 105
1. A customer puts his money in the amount of 1,500,000 into a bank deposit. If these deposits are kept as bank reserves, then it is known that the bank has a reserve ratio of 5%. What is the total deposit in the banking system? And how much has the money supply increased? 2. A bank with a minimum reserve of 25% has a total bank reserve of 100,000,000 without any excess reserves.a. What is the money multiplier? What is the money supply in circulation?b. The central bank made a new policy in which the required reserves / minimum reserves fell to 20%. What is the impact on bank reserves and the impact on the money supply 3. Show through the diagram the impact of a decrease in the minimum wage on the balance of wages, labor supply, labor demand, and the number of unemployed! Explain! 4. The minimum reserve / reserve requirement set in a country is 20% assuming the bank does not keep excess reserves. The central bank has a goal of expanding the economy by increasing the money supply by 40…
Pls help