2 Economics1. what is the total amount of reserves held in thebanking system?2. with commercial banks holding 5% of theirchecking deposits as excess reserves and therequired reserve ratio equal to the value computedabove, the central bank should BUY or SELL bondsworth $___.Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 8 percent oftheir checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the "money multiplier" is given by 1/(RR+ER).whereRR the percentage of deposits that banks are required to keep as reservesER the percentage of deposits that banks voluntarily hold as excess reservesConsider the balance sheet of one of several identical banks:ReservesLoansAssetsLiabilities and Net Worth8002,400Total Assets3,200 Liabilities and Net WorthThe required reserve ratio in this economy is 17 %. (Enter your response as an integer.)If the total money stock (supply) is $200,000, the total amount of reserves held in the banking system is $ (Enter your response as an integer.)Checking DepositsNet Worth3,20003,200

Reserves are the part of bank stores that banks hold yet don't advance out. A required save ratio is…

Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 8 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 ER Consider the balance sheet of one of several identical banks: the percentage of deposits that banks are required to keep as reserves the percentage of deposits that banks voluntarily hold as excess reserves Reserves Loans Assets 800 2,400 Liabilities and Net Worth 3,200 Checking Deposits Net Worth Total Assets The required reserve ratio in this economy is 17 %. (Enter your response as an integer.) If the total money stock (supply) is $200,000, the total amount of reserves held in the banking system is $. (Enter your response as an integer.) 3,200 Liabilities and Net Worth 3,200

Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 8 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 ER Consider the balance sheet of one of several identical banks: the percentage of deposits that banks are required to keep as reserves the percentage of deposits that banks voluntarily hold as excess reserves Reserves Loans Assets 800 2,400 Liabilities and Net Worth 3,200 Checking Deposits Net Worth Total Assets The required reserve ratio in this economy is 17 %. (Enter your response as an integer.) If the total money stock (supply) is $200,000, the total amount of reserves held in the banking system is $. (Enter your response as an integer.) 3,200 Liabilities and Net Worth 3,200

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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