4.lf the Fed set the required reserve requirement ratio to be 0.02, bank A wishes to maintain 0.03 dollar in excess reserve for every 1 dollars in transaction deposit. What is the deposit multiplier? |(Required) If bank A found themselves with 10 in excess reserve, what is the maximum amount of new deposits (loan) created by the banking system? (Required)

4.lf the Fed set the required reserve requirement ratio to be 0.02, bank A wishes to maintain 0.03 dollar in excess reserve for every 1 dollars in transaction deposit. What is the deposit multiplier? |(Required) If bank A found themselves with 10 in excess reserve, what is the maximum amount of new deposits (loan) created by the banking system? (Required)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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16. Suppose that the Federal Reserve conducts an open market operation in which it purchases $100 in US Treasury bonds from a private saver. (a) In an economy without banks, by how much, in dollar terms, will the total money supply increase as a result of this open market operation? (b) In an economy with banks in which all members of the nonbank public immedi- ately deposit all of the currency they receive, but in which all banks engage in 100 percent reserve banking, by how much will the total money supply increase as a result of this open market operation? (c) In an economy with banks, in which all banks choose a 10% reserve ratio and in which all members of the nonbank public immediately deposit all of the currency they receive, by how much will the total money supply increase as a result of this open market operation? (d) In an economy with banks, in which all banks choose a 10% reserve ratio, but in which all members of the nonbank public hold 50% of the funds they receive as…
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I only need Help with part (B)
8. Study Questions and Problems #8 Suppose the Federal Reserve's trading desk buys $500,000 in T-bills from a securities dealer, who then deposits the Fed's check in Best National Bank. Assuming that the required reserve ratio is 5%, complete the following table by showing changes in Best National Bank's balance sheet. Best National Bank Assets (Dollars) Reserves: Addendum: Changes in Reserves Actual reserves Required reserves Excess reserves Liabilities (Dollars) Checking deposits: Total liabilities Consider the money multiplier. The maximum increase in the money supply that can result from this open market transaction is
0 Question 22 (use the Deposit Expansion Multiplier (DEM) formula) Using the Fractional Reserve banking system, if the reserve ratio is 6% and someone deposits $1,000 into his checking account, the banking system potentially can increase the money supply to O $16,750.25 O $16,666.66 $16,100 $16.230.66
1. Why does the public want to hold some of its wealth as money? Answer the following: (a) What is the basic determinant of the transactions demand? The level of_ - The higher this level, the ( smaller, greater) the amount of money demanded for transactions. (b) the asset demand for money? The level of - The higher this level, the (smaller, greater ) the amount of money demanded as an asset.
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5. Consider the T-table of the Bank of Boston. Suppose the Federal Reserve Bank buys an additional $2 million in government bonds from the Bank of Boston. Assume (1) the required reserve ratio is 10 percent, and (2) the Bank of Boston issues all excess reserves in loans (I.e., there are no excess reserves). The new money supply equals $ million. Submit Balance sheet of the Bank of Boston Liabilities -55,000,000 Checkable deposits +$5,000,000 Assets Government bonds Currency (= bank reserves) +$5,000,000 Loans $0
1. What are the total loans off the people’s bank 2. Computer money multiplier 3. Suppose a depositor comes to the bank and withdraw $2000 in cash. How much money supply will be reduced in the economy?
6. Required and excess reserves Suppose that Second Republic Bank currently has $200,000 in demand deposits and $130,000 in outstanding loans. The Federal Reserve has set the reserve requirement at 10%. Second Republic Reserves Required Reserves Excess Reserves (Dollars) (Dollars) (Dollars)
4-- Suppose a bank's balance sheet looks like this. The bank is required to hold reserves equal to 10% of deposits. Assets Reserves Loans Total Assets $ 800 $ Liabilities 5200 $ 6000 $ Deposits 6000 Total Liabilities LA 6000 a. How much excess reserves does the bank hold? b. How much more can this bank lend?
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