Assume that the currency to deposit ratio is .2 and that banks keep .1 of deposits as reserves. The share of money held as deposits is and the reserve ratio is .5; .2 1/1.2; .1 .9; .2 .8;,9
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- Indicate which of the functions of money (a medium of exchange, a unit of account, and a store of value) each of the following performs in the U.S. economy. Check all that apply. Plastic credit card Picasso painting Mexican peso Demand deposit Plastic credit card Picasso painting Mexican peso Medium of Exchange Unit of Account Given your answers to the previous task, indicate whether each of the following is considered money in the U.S. economy. Money Yes No Demand deposit 0 0 0 0 Store of Value 0 0 0 02. Consider the following data (all values are in billions of dollars): (b) Currency Transactional deposits Bank reserves June 1930 June 1931 June 1932 $ 3.681 3.995 4.959 21.612 19.888 15.490 3.227 3.307 2.829 (a) Calculate the values for each period for the currency-deposit ratio, the ratio of total reserves to deposits, the monetary base, M1, and the money multiplier. Can you explain why the currency-deposit ratio and the ratio of total reserves to deposits moved as they did between 1930 and 1932(Great depression era)?Liquidity Aggregates (in million pesos) Transferable and other deposits in foreign currency 2,674,352.00 Savings deposits 4,376,259.00 Small-time deposits 2,794,328.00 Demand deposits 3,788,216.00 Peso deposit substitutes 540,731.00 Currency 1,281,527.00 a. MI b. M2 с. МЗ d. M4 Use the information below for Tasks 3 to 5. си %3D0.9, re = 0.1; H = 10,000,000 Task 3. Solve for the money multiplier and money supply. Task 4. Solve for the impact on money supply when the reserve-ratio increases to 0.2. Task 5. Solve for the impact on the money multiplier when the currency-deposit ratio falls to 0.7.
- Assume you are managing a bank in a country that is holding $34 million in assets and $75 million in liabilities denominated in dollars. a. Determine the net exposure in dollars. b. Calculate the gain or loss for each currency below given last year’s spot rate and the current spot rate respectively for the U.S. $. Euro: 0.78717; 0.9048 Krone: 5.7538; 6.755 Columbian Peso: 2,535.253; 3,384.9 Mexican Peso: 16.9566; 19.3533 Dinar: .2689; .30466 Dong: 17,476.5; 23,201.52 c. Convert each of your answers in part b to current dollar equivalents.Give typing answer with explanation and conclusionIn an economy, savings deposits are $10,000 billion, currency is $1,500 billion, checkable deposits are $4,000 billion, money market funds and other deposits are $1,000 billion, and small time deposits are $200 billion. What are the values of M1 and M2? M1 is _______ and M2 is _______. A. $16,700 billion; $5,500 billion B. $5,500 billion; $16,700 billion C. $15,500 billion; $6,700 billion D. $1,500 billion; $20,700 billion
- In an economy, the banks prefer to keep 25% of their deposits in reserve. The population likes to keep their currency holdings equal to 10% of the deposits. Initially, there was zero money in the economy. Then the central bank buys $120 worth of T-bills from a household. The household receives $120 on its checking account. 1. the commercial bank formed reserves and gave out a loan. The population allocated the lent funds between the currency in pockets and checkable accounts. Before anything else happens, how much money is there in the economy at the end of Round 1? ANSWER: 288 For question 1 How is this answer obtained?, How would you solve question 2. 2. In Round 2, more lending, borrowing, and reserve formation takes place. How much is in DEPOSITS in the economy at the end of Round 2?50. Commercial banks maintain their reserves in the form of cash in their bank vaults and deposits at the Bank of Canada. deposits at other commercial banks that are immediately accessible. cash in their bank vaults. cash and foreign currency at the Bank of Canada. gold in their bank vaults.An increase in interest rates in New Zealand all other things constant would Select one: a.raise the value of the $NZ. b.lower the value of the $NZ. c.have no impact on the value of the $NZ. d.lead to a run down of foreign reserves as the Reserve Bank was forced to buy $NZ.
- [Related to the Solved Problem] Consider the following data: Currency Checkable deposits Bank reserves $930 billion $780 billion $780 billion a. Calculate the values for the currency-to-deposit ratio, the ratio of total reserves to deposits, the monetary base, the M1 money multiplier, and the M1 money supply The currency-to-deposit ratio is (Enter your response rounded to two decimal places.)Given an initial deposit of $500, and assuming that the required reserve ratio equals 10%, and that bank customers do not hold any currency, fill out the following chart for three rounds of deposits. Round # Deposits Required Reserves Excess Reserves Loans 1 _____ _____ _____ _____ 2 _____ _____ _____ _____ 3 _____ _____ _____ _____ Fill out the table above. What is the amount of required reserves in round #2? What is the amount loaned out by this bank in round #3? What is the value of the “oversimplified” money multiplier? If the money creation process continues to its limit, by how much will the money supply ultimately change? (Hint: Use the money multiplier process formula to answer this question.)- Open-market operations have their initial effect on bank lending. reserves. revenues. profits.