Assume a bank has reserves of $21 million and demand deposits of $200 million. Legal Reserve Requirements for Checking Accounts, effective January 18, 2018** $0 million - $16 million 0% $16 million - $122.3 million 3. over $122.3 million 10 Time deposits have 0% reserve requirement. The numerical boundaries of these limits are revised annually. Instructions: Round your answers to one decimal place. a) How much are the bank's required reserves? %$4 million. b) How much are the bank's excess reserves? million. %24

Assume a bank has reserves of $21 million and demand deposits of $200 million. Legal Reserve Requirements for Checking Accounts, effective January 18, 2018** $0 million - $16 million 0% $16 million - $122.3 million 3. over $122.3 million 10 Time deposits have 0% reserve requirement. The numerical boundaries of these limits are revised annually. Instructions: Round your answers to one decimal place. a) How much are the bank's required reserves? %$4 million. b) How much are the bank's excess reserves? million. %24

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Only typed Answer
Explain how banks create money using your own example of a T-account.Define the deposit and RRR clearly.
2. Here is the balance sheet of the consolidated banking system of the country of Zargadee (all entries are in millions): Consolidated Balance Sheet of the Entire Economy of Zargadee Assets Reserves Cash in Vault Deposits at CBZ Bonds Loans 50 90 Total Reserves Total Assets 140 460 1000 1600 Liabilities Deposits Borrowing from CBZ Total Liabilities 1400 200 1600 Assume that 1) households hold no currency and 2) banks hold no excess reserves. The current reserve requirement is 10%. The Central Bank of Zargadee (CBZ) uses the three traditional tools to perform monetary policy in an economy that is reserve constrained. a. Under our assumptions, what is the money multiplier? For each part (b)-(d) below, i) Conceptually explain the effect of the policy on the money supply. ii) Calculate the change in M1 given our assumptions. iii) Construct the new balance sheet of the consolidated banking system of Zargadee under the new policy. iv) When the money supply changes, list a chain of events to…
"If the required reserve ratio is 20% and the current deposit is $50,000. Calculate the amount of new money created." O"$200,000" O "$250,000" O"$10,000" "$40,000"
26. To be considered money, a financial asset must be Group of answer choices a. Convertible into gold or silver. b. Serving as a medium of exchange, standard of value, and store of value. c. Coins, currency, or fractional reserve. d. Issued by the Federal Reserve System. e. Kept in banks.
Initial deposit is $10,000 Required Reserve Ratio is 20% Calculate: $ Multiplier Required Reserves Excess Reserves
Celine, another manager at a different branch of MillerBank in a different region of the country, faces a reserve requirement of 10%. She has excess reserves 0f $1000. What’s the maximum amount that she could increase the money supply? a.500 dollars b.1000 dollars c.10000 dollars d.100 dollars e.2000 dollars
The table shows the commercial banks' balance sheet (aggregated over all the banks). The commercial banks' desired reserve ratio on all deposits is 10 percent and there is no currency drain. Calculate the bank's excess reserves. >>> Answer to 2 decimal places. Assets Reserves at the Fed Cash in vault Securities Loans The banks' excess reserves are $☐ million. Liabilities (millions of dollars) 2535 20 Checkable deposits 15 Savings deposits 40 95
QUESTION 24 LAST CHANCE BANK OF TOMBSTONE BALANCE SHEET ASSETS LIABILITIES & NET WORTH $900,000 $100,000 $300,000 $3,700,000 $2.000.000 cash in the vault: demand deposits: $5,000,000 deposits at Fed US treasury bonds: loans: Building: capital stock: $2,000,000 TOTALS: $7,000,000 TOTALS: $7,000,000 24. Given a reserve requirement ratio of 10%, what will be the maximum effect on quantity of money in circulation of a Federal Reserve sale of $100,000 worth of government securities directly to a bank? an increase of $100,000 a decrease of $1,000,000 a decrease of $100,000 an increase of $1,000,000
2
1
For this bank what would be the level of excess reserves if the required reserve ratio were 20%? A) 0 B) $300,000 C) $900,000 D) $1,000,000 E) There would be a shortfall in required reserves of $100,000