a. What is the reserve requirement? b. Suppose the reserve requirement is charlged to 10 percent. Reconstruct the balance sheet of the total banking system after all banks have fully utilized their lending capacity. Assets (in Billions) Llabilities (in Bilions) Transactions account deposits Total reserves Securities Loans Total assets Total liabilities

a. What is the reserve requirement? b. Suppose the reserve requirement is charlged to 10 percent. Reconstruct the balance sheet of the total banking system after all banks have fully utilized their lending capacity. Assets (in Billions) Llabilities (in Bilions) Transactions account deposits Total reserves Securities Loans Total assets Total liabilities

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which financial innovation allows banks to avoid reserve requirements and to pay interest on deposits? A. Money market funds B. Sweep accounts C. Both money market funds and sweep accounts
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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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In a fractional-reserve banking system, such as we have in the United States, banks create money. 1. How does a fractional-reserve banking system create money? 2. How is this process affected when banks hold excess reserves or depositors hold extra cash?
But which event will increase the quantity of deposits the banking system can create? A. An increase in the monetary base B. An increase in the currency drain C. An increase in the desired reserves by banks
Are near money's highly liquid financial assets or many financial asset?
a). Calculate excess reserves when required reserve ratio on demand deposit is 14% and required reserve ratio on time deposit is 3%. b). suppose that required reserve ratios are changed to 16% on demand deposits and 0% on time deposits. Calculate excess reserves c. suppose bank sells 3 million in securities on the open market. Calculate the change in the bank's excess reserves when the required reserve ratio on demand deposits is 14%