1. When the banking industry in aggregate has a higher reserve ratio than the required reserve ratio, the:A. greater the money multiplier.B. more money will be created.C. smaller the money multiplier.D. greater the level of required reserves.2. If I took cash from my mattress/sock drawer/or some other place and deposit $100 in my local bank, this canlead to a maximum expansion in bank deposits of $500. Using the simple money multiplier formula, therequired reserve ratio must be:A. 20 percent.B. 25 percent.C. 40 percent.D. 50 percent.3. If you personally knew in 2020 that interest rates would jump from 2% to nearly 7% in 2022, you wouldwant to be holding:A. more money because bond pries will likely fall.B. less money because bond pries will likely rise.C. more money because bond pries will likely rise.D. more money because bond pries will stay the same due to fed policy.4.In 2008 the Federal Reserve decreases the reserve requirement as part of the stimulus, it:A. decreases the amount of excess reserves and this eventually increases the money supply.B. decreases the amount of excess reserves and this eventually decreases the money supply.C. decreases the amount of excess reserves and impacts the money supply slightly due to AS/AD model.D. increases the amount of excess reserves and this eventually decreases the money supply.5. From one day to the next, an increase in the nightly Federal funds rate could be caused by:A. an open market purchase of government securities.B. an increase in the reserve requirement.C. an open market purchase of government securities by Goldman SachsD. an increase in the excess reserves of the banking system.6. Monetary policy that seeks to minimize the business cycle in the AS/AD model involves:A. contractionary monetary policy throughout the business cycle.B. expansionary monetary policy throughout the business cycle.C. contractionary monetary policy during boom periods and expansionary monetary policy during recession.D. contractionary monetary policy during recession and expansionary monetary policy during boom periods.7. Inflation in 2024 is expected to be 4%. If in fact it comes in at 2%, this would:A. help banks and borrowers.B. help banks but hurts borrowers.C. help borrowers but hurts banksD. hurt banks and borrowers.8. If in 2023 the growth rate of real GDP is 2 percent and the growth rate of the money supply is 5 percent, anadvocate of the quantity theory of money would predict a:A. 2 percent inflation.B. 3 percent deflation.C. 7 percent inflation.D. 3 percent inflation. 23. The likely effect of a contractionary monetary policy in Japan would be to:A. decrease the value of the dollar and the U.S. trade deficit.B. increase the value of the dollar and the U.S. trade deficit.C. decrease the value of the dollar and increase the U.S. trade deficit.D. increase the value of the dollar and decrease the U.S. trade deficit.24. In April 2022 the Federal Reserve boosted its target for the Federal funds rate for the first time in 14 years,increasing it from a 10-year low of .25% to 4.25%. What role did the Biden Administration have in thisdecision?A. None; the Fed is not accountable to the executive branch of government.B. Some; most but not all of the people who voted for this change are appointees of the Bush Administration.C. Considerable; if the Bush Administration were unhappy with the decision, it could force the resignation ofthose who voted in ways it did not like.D. Total; policy makers at the Fed serve at the pleasure of the President.25. When the Fed reduces the discount rate, this sends a signal to banks that the Fed wants:A. the money supply to expand.B. the money supply to contract.C. the Federal funds rate to increase.D. to reduce the reserve requirement.

Banking refers to the system of financial institutions and practices that facilitate various monetary transactions, including depositing funds, providing loans, managing money, and offering financial services. Banks, credit unions, and other financial entities comprise the banking sector, which plays a critical role in the economy by channeling funds from savers to borrowers, thus enabling capital formation and economic growth.As per our guidelines, we are supposed only 1 question, if multiple questions are given. Kindly repost the remaining questions separately.When banks collectively have a larger reserve ratio than the statutory one, the money multiplier decreases. The reserve ratio, imposed by central banks, requires banks to maintain a certain percentage of deposits. Banks cannot lend more when they maintain more reserves than needed.A greater reserve ratio means banks keep more deposits as reserves, decreasing the money multiplier. Based on reserve changes, the money multiplier measures money supply growth. More reserves reduce banks' ability to issue new money by reducing their excess reserves. Each dollar of reserves expands the money supply less.Exploring the incorrect options:Option A. Greater the money multiplier: This option is incorrect. Due to limited lending capacity, the money multiplier drops when the actual reserve ratio exceeds the statutory reserve ratio.Option B. More money will be created: This option is incorrect. More reserves limit banks' capacity to lend money with a higher reserve ratio. So, money generation decreases.Option D. Greater the level of required reserves: This option is also incorrect. More reserves limit banks' capacity to lend money with a higher reserve ratio. So, money generation decreases.A greater aggregate reserve ratio than the needed ratio decreases the money multiplier by limiting banks' capacity to lend, lowering the money supply multiplier.Ans:Option c). smaller the money multiplier

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1. When the banking industry in aggregate has a higher reserve ratio than the required reserve ratio, the: A. greater the money multiplier. B. more money will be created. C. smaller the money multiplier. D. greater the level of required reserves.

1. When the banking industry in aggregate has a higher reserve ratio than the required reserve ratio, the: A. greater the money multiplier. B. more money will be created. C. smaller the money multiplier. D. greater the level of required reserves.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The table below shows information for United Bank. Deposits Reserves Reserve Requirement $300 million $33 million 10% Which of the following statements is true concerning United Bank in the federal funds market? Multiple Choice C O United Bank will lend $33 million reserves in the federal funds market. O United Bank will borrow $30 million reserves in the federal funds market. United Bank will lend $3 million reserves in the federal funds market. United Bank will borrow $3 million reserves in the federal funds market. @ a $ % Λ &
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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.
B. Consider the following data Currency Checkable deposits Savings deposits $1,200 billion $1,500 billion $2,500 billion Banking system's reserve-to-deposit ratio is 30%. Calculate (show your werk) 1. Bank reserves = 2. Monetary base = 3. M1 money supply = %3D 4. Realistic money multiplier =
Assets Liabilities Reserve 200 Deposits 1000 Loan 800 Total 1000 Total 1000 1. Assuming the bank does not hold any excess reserve, what is the required reserve ratio? 2. What is The value of deposit expansion multiplier ? Note : show your calculations
In a system of 100-percent-reserve banking, a. banks do not accept deposits. b. banks do not influence the supply of money. c. loans are the only asset item for banks. d. banks can increase the money supply.
10. If the reserve ratio is 20% and the banking system has excess reserves of $50, the maximum amount of new deposits that can be created through lending is $ Type your answer here
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How does deposit insurance encourage banks to take on too much risk? 1. Banks can make riskier investments because the government has insured banks against losses on their investments 2. Banks can make riskier investments without worrying about deposit withdrawals because the government has insured depositors against losses 3. Deposit insurance encourages banks to increase investments in riskless assets 4. With deposit insurance, depositors have more incentive to withdraw their deposits if the managers make reckless investments