Assume that you are interested in earning some returnon the idle balances you usually keep in your checkingaccount and decide to buy some money market mutualfunds shares by writing a check. Comment on the effectof your action (with everything else the same) on M1and M2

Q: Refer to the table below. Item Dollars Checkable Deposits Small Time Deposits Currency Money-Market…

A: The money supply is the entire quantity of money in circulation, including cash, coins, and bank…

Q: Firm A can borrow at 5% fixed or at Libor plus 0.5% in the fixed and floating rate markets,…

A: The concept of swap rate typically shows the rate of interest differential b/w two financial…

Q: 4. Looking forward - Future value Compounding Interest You know that paying yourself by depositing…

A: The Future Value of an Annuity Factor is a mathematical factor used in financial computations to…

Q: Suppose the value of a bank's variable-rate assets is, liabilities is $100 million. Since this bank…

A: In the banking sector, when there is mismatch between the assets and liabilities of a bank, it is…

Q: Households and businesses often hold some of their wealth as non-interest earning money balances…

A: People hold some part of their wealth and some as interest bearing asset.

Q: Suppose Nickelmore Bank has $21100 in assets, and its net worth is $11000. What is the total value…

A: Assets are the resource that will provide future benefit.  Liability is the amount that is unpaid…

Q: Assume that Bank A holds total reserves of $978, the required reserves are $432 and to is $3,600. If…

A: Given that, Bank A holds total reserves = $978  Required reserves = $432  Total deposit = $3,600

Q: From the accompanying cash flow diagram, find the value of X that will establish economic…

A: here we calculate the value of X by using the given cashflow and other information and choose the…

Q: An equation for Aggregate Expenditure is: AE = $3600 – 0.8Y, %3D In equilibrium, Income 'Y' =…

A: The aggregate expenditure is the overall expenditure in an economy over a given period of time. The…

Q: Professor Rush withdraws $20 from his checking account at Bank of Gainesville, keeps $15 in cash,…

A: M2 Includes M2 so there is no change in M2.

Q: If reserves in the banking system increase by $300, then checkable deposits will increase by $5,000…

A:

Q: Activity in money markets increased significantly in the late 1970s and early 1980s because of O…

A: The correct answer is: both A and B of the above.Activity in money markets increased significantly…

Q: efer to the table below. em Dollars In Billions heckable Deposits $600 mall Time Deposits $700…

A: Money supply is mainly divided into M1 , M2 and M3 , these are the indicators of money supply , so…

Q: PLS HELP ASAP ON BOTH

A: 1. When a dealer places a temporary hold on an account, there are a number of factors that that must…

Q: Please show work

A: The amount deposited 5 years ago is $1,000 and the amount deposited one year ago is $2,000.The…

Q: In a fractional-reserve banking system, each bank lends out 100% of deposits and does not keep…

A: This can be defined as a concept that represents a situation in which the spending of the private…

Q: How can we o determine the extent to which borrowed funds havebeen used to finance assets?

A: Borrowed funds are those funds which business borrows either to finance their assets or to use as…

Q: Haley used $200,000 from her savings account deposits as a down payment to buy a house. What…

A: A Medium of Exchange: The just alter­native to utilizing money is to return to the bargain…

Q: If a bank has $118400 in reserves, $201600 in loans, what is the banks reserve ratio?' 19% 59% O22%…

A: Reserve ratio = Total Reserves / Total Deposits Total deposits = Total reserves + Total loan

Q: How much money is created by a bank with $20 million in assets if it lends out half of its assets…

A: Required Reserved ration = 1/Multiplier.

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.