12) Based on the information in the table, we can conclude that, in 1932, each of the follow occurred except: December 1931 December 1932 Currency held by Reserve-deposit public (in billions) ratio $4.59 $4.82 0.095 0.109 Bank reserves (in billions) $3.11 $3.18 Money supply (in billions) $37.3 $34.0 A) The Federal Reserve injected reserves into the banking system. B) Banks were keeping more of their deposits in reserves, and making fewer loans. C) The Federal Reserve conducted open-market sales of U.S. government bonds. D) The public increased the amount of currency it held.

12) Based on the information in the table, we can conclude that, in 1932, each of the follow occurred except: December 1931 December 1932 Currency held by Reserve-deposit public (in billions) ratio $4.59 $4.82 0.095 0.109 Bank reserves (in billions) $3.11 $3.18 Money supply (in billions) $37.3 $34.0 A) The Federal Reserve injected reserves into the banking system. B) Banks were keeping more of their deposits in reserves, and making fewer loans. C) The Federal Reserve conducted open-market sales of U.S. government bonds. D) The public increased the amount of currency it held.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5) Suppose the required reserve ratio is 0.12, the currency ratio is 0.6, and the excess reserve ratio is 0.03. The Fed decides to purchase $15 billion of securities through open market operations. Calculate the effect on the money supply and indicate whether it increases or decreases. In other words, what is the change in the money supply?
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1) Why does the Federal Reserve rely on Open Market Operations the most to influence the money supply? ( Max 200 words) 2) Why would the Federal Reserve rarely change the Required Reserve Ratio? ( Max 200 words) 3) How do expansionary actions by the Federal Reserve increase the money supply? ( Max 100 words) 4) How do contractionary actions by the Federal Reserve decrease the money supply? ( Max 100 words) 5) Can monetary policy fix economic shocks? ( Max 200 words)
Assume the Required Reserve Ratio is 20% for all the banks. If the Federal Reserve sells $500,000 worth of US Treasury Bonds to the banking system (these three banks) who pay for the bonds with Reserves (Cash), what impact will this transaction have on the loan creating potential of the banking system?
[B] The data pertaining to the various components of the money supply in India are as follows Currency with public Notes in circulation Rupee coins Small coins Cash in hand Deposit Money of the Public Demand deposits with bank Rs in crore 1,44,818 1,942 991 4,986 99,106 5,627 4,83,560 Other deposits with reserve bank Time deposits with bank Post office Deposits Post office savings bank deposits Total post office deposits 5,041 25,969 Compute the four measures of money stock M1, M2, M3, M4 [4]
Suppose a commercial banking system had 300,000 of outstanding checkable deposits and actual reserves of 20,000. If the ratio is 0.1%, the banking system can expand the supply of money by maximum of $_________ Can someone tell me how to solve that and explain please
For all questions assume the following starting point: The money supply (M) is composed of currency (C) held by the non-bank private sector (NBPS) and demand deposits (DD) held at banks. Banks are required to hold cash reserves (CR) equal to 10% of their demand deposit liabilities. The remainder of the banks DD liabilities are backed by loans (L). Initially banks have 2000 in cash reserves and the NBPS holds 500 in currency. Currently, banks do not hold excess reserves. (A.) What are the initial values for DD, L and M? (B.) What happens to the values in part a, if the NBPS decides to hold an additional 200 in currency?
24. Assuming the required reserve ratio is 10%, how much can this bank lend? a) $200,000 b) $300,000 c) $400,000 d) $550,000 e) $3,000,000
Suppose we have the following banking data (in $billion): C = $300 Currency in circulation D = $2,000 Demand deposits rr = 0.10 Required reserve ratio ER = $1,340 Excess reserves in the banking system There are no other types of deposits in the banking system. Calculate for us the following: Currency-deposit ratio (c) Excess-Reserves-deposit ratio (er) = = Money supply = Monetary base Money multiplier (m) = $billion $billion
Since the Fed has begun paying interest on bank reserves at the Fed, do barks still want to avoid holding excess reserves? Context: If lending was more profitable than the currently very low interest rate (formerly zero) that could be received from the Fed on excess reserves, we would still normally expect barks to lend out excess reserves rather than maintain them as excess reserves Judging from the fact that there has been a huge increase in holdings of excess reserves in the barking system, however, there may well be other constraints (such as Basel III) that may be limiting bank's willingness to lend out excess reserves.
(Table: Balance Sheet) Refer to the information in the tableBalance Sheet. If the reserve ratio is 25% and the bank is exactly meeting its reserve requirement and the bank is exactly meeting its reserve requirement, loans are: A) $60,000. B) $15,000. C) $5,000. D) $80,000.
You are given the following information: Bank deposits (D) 350 Currency-to-deposits ratio (c) 0.20 Required reserve ratio (rr) 0.15 Solve for the monetary base level (B) in this economy. Solve for the level of bank reserves (R) in this economy. Solve for the money supply level (M) in this economy. Suppose there is a sudden rise in the currency-to-deposits ratio, from the original level of 0.2 to a new level of 0.4. If everything else remains unchanged, find the level of monetary base needed to keep money supply fixed at the level you solved for in part c. Continue to consider c=0.4. Find the level of required reserve ratio needed to keep the monetary base and the money supply fixed at the level you solved or in parts a and c, respectively.