Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 7 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the "money multiplier" is given by 1/(RR+ ER), where RR - the percentage of deposits that banks are required to keep as reserves ER - the percentage of deposits that banks voluntarily hold as excess reserves Consider the balance sheet of one of several identical banks: Assets Liabilities and Net Worth Reserves 700 Checking Deposits 2,800 Loans 2,100 Net Worth Total Assets 2,800 Liabilities and Net Worth 2,800 The required reserve ratio in this economy is%. (Enter your response as an integer.),

Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 7 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the "money multiplier" is given by 1/(RR+ ER), where RR - the percentage of deposits that banks are required to keep as reserves ER - the percentage of deposits that banks voluntarily hold as excess reserves Consider the balance sheet of one of several identical banks: Assets Liabilities and Net Worth Reserves 700 Checking Deposits 2,800 Loans 2,100 Net Worth Total Assets 2,800 Liabilities and Net Worth 2,800 The required reserve ratio in this economy is%. (Enter your response as an integer.),

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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