Suppose a customer makes a $2,280 cash withdrawal from Bank A. If the reserve requirement wastotal decrease in the money supply in the6 percent, the deposit would ultimately lead to aeconomy, if all banks in the system lend out 100 percent of their excess reserves.O $2,143.20O $2,280O $28,500O $35,720$38,000

The reserve requirement refers to the portion of deposits banks are legally required to keep with…

Answered: 6 percent, the deposit would ultimately…

6 percent, the deposit would ultimately lead to a ___ total decrease in the economy, if all banks in the system lend out 100 percent of their excess res O $2,143.20 O $2,280 $28,500 $35,720 O $38,000

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose a customer makes a $2,280 cash withdrawal from Bank A. If the reserve requirement was
total decrease in the money supply in the
6 percent, the deposit would ultimately lead to a
economy, if all banks in the system lend out 100 percent of their excess reserves.
O $2,143.20
O $2,280
O $28,500
O $35,720
$38,000

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In a fractional-reserve banking system, each bank lends out 100% of deposits and does not keep reserves. Then, a one-dollar deposit will generate dollar(s) of money supply. 0 0 O infinite 01 O 10 O 100
Bank A:Reserves on hand $38,000Deposit in the Fed $30,000US government bonds $12,000Checking account balances $120,000Savings account balances $25,000Bank B:Reserves on hand $50,000US government bonds $7500Savings account balances $20,000Checking account balances $100,000 In addition, people in this economy hold $8800 in cash, and all banks have the same reserve requirements we've used all semester. Calculate the (economy-wide) currency ratio, carefully following all numeric instructions. Do not convert the ratio into percent. In other words, if you get k of 0.99, enter only 0.99 in the blank.
QUESTION 11 If the Federal Reserve purchases $250 million in US Treasury Securities, what will happen to overall bank deposits under the following assumptions: Banks convert 100% of excess reserves to loans, borrowers return 70% of cash to bank, and banks' reserve requirement is 10% O $437.5 million O $625 million O $833.33 million O $2500 million O $1750 million
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65