Balance sheet of Bank National Assets Liabilities Vault Cash $1,500 Deposit in Fed $ 500 Loans $4,000 Total Assets $6,000 Deposits $6,000 Total Liabilities $6,000 (1) If r = 10%, how much can the whole banking system expand the money supply? a. $20,000 b. $54,000 c. $40,000 d. $11,000 e. $5,000 (2) If the Fed changed the reserve requirement from 10% to 5% - the bank’s Excess Reserves (ER) would: a. Increase by $300 b. Increase by $1700 c. Decrease by $1400 d. Decrease by $2000 e. Increase by $5700 (3) If the Fed changed the reserve requirement from 10% to 25% the money supply (MS) in the whole banking system could: a. Decrease by $18000 b. Decrease by $54000 c. Increase by $18000 d. Decrease by $36000 e. Increase by $36000 (4) If the Fed changed the reserve requirement from 10% to 39% Bank National would now have ER of: a. -$340 b. -$3,660 c. -$2,340 d. -$500 e. -$250
Balance sheet of Bank National Assets Liabilities Vault Cash $1,500 Deposit in Fed $ 500 Loans $4,000 Total Assets $6,000 Deposits $6,000 Total Liabilities $6,000 (1) If r = 10%, how much can the whole banking system expand the money supply? a. $20,000 b. $54,000 c. $40,000 d. $11,000 e. $5,000 (2) If the Fed changed the reserve requirement from 10% to 5% - the bank’s Excess Reserves (ER) would: a. Increase by $300 b. Increase by $1700 c. Decrease by $1400 d. Decrease by $2000 e. Increase by $5700 (3) If the Fed changed the reserve requirement from 10% to 25% the money supply (MS) in the whole banking system could: a. Decrease by $18000 b. Decrease by $54000 c. Increase by $18000 d. Decrease by $36000 e. Increase by $36000 (4) If the Fed changed the reserve requirement from 10% to 39% Bank National would now have ER of: a. -$340 b. -$3,660 c. -$2,340 d. -$500 e. -$250
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
| Assets | Liabilities |
| Vault Cash | $1,500 |
| Deposit in Fed | $ 500 |
| Loans | $4,000 |
| Total Assets | $6,000 |
| Deposits | $6,000 |
| Total Liabilities | $6,000 |
(1) If r = 10%, how much can the whole banking system expand the money supply?
a. $20,000
b. $54,000
c. $40,000
d. $11,000
e. $5,000
(2) If the Fed changed the reserve requirement from 10% to 5% - the bank’s
a. Increase by $300
b. Increase by $1700
c. Decrease by $1400
d. Decrease by $2000
e. Increase by $5700
(3) If the Fed changed the reserve requirement from 10% to 25% the money supply (MS) in the whole banking system could:
a. Decrease by $18000
b. Decrease by $54000
c. Increase by $18000
d. Decrease by $36000
e. Increase by $36000
(4) If the Fed changed the reserve requirement from 10% to 39% Bank National would now have ER of:
a. -$340
b. -$3,660
c. -$2,340
d. -$500
e. -$250
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