Assume the required reserve ratio is 10%. Supposethat currency in circulation is $600 billion, theamount of checkable deposits is $900 billion, andexcess reserves are $15 billion.a. Calculate the money supply, the currencydeposit ratio, the excess reserve ratio, and themoney multiplier?b. Suppose the central bank conducts an unusuallylarge open market purchase of bonds held bybanks of $1,400 billion due to a sharp contractionin the economy. Assuming the ratios youcalculated in the previous part remain the same,predict the effect on the money supply.

Money supply depends on the reserve ratio , if the reserve ratio is more money supply is less and…

Assume the required reserve ratio is 10%. Suppose that currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, and excess reserves are $15 billion. a. Calculate the money supply, the currency deposit ratio, the excess reserve ratio, and the

Assume the required reserve ratio is 10%. Suppose that currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, and excess reserves are $15 billion. a. Calculate the money supply, the currency deposit ratio, the excess reserve ratio, and the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose the Federal Reserve set the reserve requirement at 20%. Assume that banks lend all reserves that are not required to be held. Instructions: Round your answers to two decimal places. a. Complete the table below based on this information. Fractional Reserve Banking Transaction Sean receives $1,000 in cash and deposits the funds into his checking account. Sean's bank loans Maria all reserves that are not required to be held. Maria's bank loans Jackson all reserves that are not required to be held. Transaction Sean receives $1,000 in cash and deposits the funds into his checking account. Sean's bank loans Maria all reserves that are not required to be held. Deposit Maria's bank loans Jackson all reserves that are not required to be held. $1,000.00 Jackson's bank loans Paul all reserves that are not required to be held. Total Money Created by Transactions b. Suppose Instead that the reserve requirement is 15%. Complete the table using the new reserve requirement. Fractional Reserve…
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Suppose that currency in circulation is $600 billion, the amount of chequable deposits is $900 billion, excess reserves are $15 billion, and the desired reserve ratio ra is 10%. Calculate the money supply, the currency deposit ratio, the excess reserve ratio, and the money multiplier.
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Please show equation: If the required reserve ratio (RRR) in the U.S. is 40 percent and Allen gathers $10,000 from cash sales and deposit the money into his U.S. National Bank checking account, then the change in the U.S. money supply should be Answers: A. No change B. A $4,000 increase C. A $15,000 increase D. A $25,000 increase
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Supply of Money Suppose the monetary base is GHS 800 billion, the current reserve-deposit ratio is 0.1 and the currency -deposit ratio is 0.7. Calculate the money multiplier and the money supply