China lowers reserve requirements The People's Bank of China lowered the required reserve ratio from 13.5 percent to 13 percent but it remained much higher than in other countries. Source: Bloom If the currency drain ratio in China is 10 percent of deposits and the desired reserve ratio equals the required reserve ratio, calculate the money multiplier in China and compare it with the U.S. money multiplier. Assume that the required reserve ratio in the United States is 10 percent, the required reserve ratio in China is 13 percent, and the currency drain ratio in both countries is 10 percent of deposits. The money multiplier in China is. >>> Answer to 1 decimal place.

China lowers reserve requirements The People's Bank of China lowered the required reserve ratio from 13.5 percent to 13 percent but it remained much higher than in other countries. Source: Bloom If the currency drain ratio in China is 10 percent of deposits and the desired reserve ratio equals the required reserve ratio, calculate the money multiplier in China and compare it with the U.S. money multiplier. Assume that the required reserve ratio in the United States is 10 percent, the required reserve ratio in China is 13 percent, and the currency drain ratio in both countries is 10 percent of deposits. The money multiplier in China is. >>> Answer to 1 decimal place.

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 reserve requirement is 19%, banks hold no excess reserves, and there are no additional currency holdings. For each of the following scenarios, find the change in deposits, reserves, and loans for each bank. Instructions: Round your answers to two decimal places. a. Mickey receives his paycheck of $2,400 for the week and deposits the check at First Bank. Use the table below to show the change in assets and liabilities at First Bank resulting from this transaction. Assets Change in Reserves: $ Change in Loans: $ b. Suppose that Austin gets a loan from First Bank in the amount from the "Loans" cell in the table in part a, and uses it to buy some Jewelry from Jenny. Jenny takes the money from Austin and deposits it at Second Bank. Use the table below to show the change in assets and liabilities at Second Bank resulting from this transaction. Assets Change in Reserves: $ Change in Loans: $ Liabilities Change in Deposits: $ Assets Change in Reserves: $ Change in Loans: $…
The pandemic has impacted the use of currency in our economy. Explain in your own words, how the changes in the use of currency would affect the monetary base in the banking system, while holding all other factors constant.
Beijing—China's central bank reduced the amount of reserves commercial banks are required to hold, freeing up money for lending in the latest easing measure to shore up the world's second-largest economy. The People's Bank of China's percentage point cut in the reserve requirement lowers the reserve-requirement ratio, or RRR, to 11.5 percent for large banks. The move frees up about US$79 billion in additional funds that banks can now lend. by how much did excess reserves in China increase and by how much did the lending capacity of Chinese banks increase as a result?
Suppose you are the only currency holder in an economy, and you have $220 in currency. What would the money supply be in the following scenarios? [Hint: Use the money multiplier for Fractional Reserve Banking] [Blank 1] You put your $220 under your pillow[Blank 2] You put your $220 in a full reserve banking system[Blank 3] You put your $220 in a fractional reserve banking system where the reserve ratio is 10%[Blank 4] You put your $220 in a fractional reserve banking system where the reserve ratio is 17%
Suppose the desired reserve ratio in Canada is 15%. Assume that the Bank of Canada has decided to increase the total quantity of money in the economy-as measured by M1-by $150 million. The Bank plans to do this by printing Canadian dollars. How much money must the Bank print to increase the money supply by the desired amount? (Calculate your answer in millions of CAD, round it to two decimal places, and write it without units. E.g., write 1.00 for $1 million.)
If Canadians shift $20 million of their funds from their fixed term deposit accounts at their banks to their chequable accounts at their banks, what impact will this shift have on Canada’s money supply as measured by M1+ and M2? Briefly explain.
A bank holds $10 for every $100 in deposits. The bank wants to hold $9 for every $100 in deposits. The bank holds actual reserves of $22,000 and desired reserves of $13,000. What is the actual reserve ratio, the desired reserve ratio, and the excess reserves? >>> Answer to 2 decimal places. The actual reserve ratio is The desired reserve ratio is The excess reserves are $
The reserve requirement, open market operations, and the moneysupply Consider a system of banking in which the Federal Reserve uses required reserves to control the money supply (as was the case in the United States before 2008). Assume that banks do not hold excess reserves and that households do not hold currency, so the only money exists in the form of demand deposits. To further simplify, assume the banking system has total reserves of $300. Determine the money multiplier as well as the money supply for each reserve requirement listed in the following table. Reserve Requirement Simple Money Multiplier Money Supply (Percent) 5 (0.5, 1, 5, 10 or 20) (150, 300, 1500, 3000 or 6000) 10 (0.5, 1, 5, 10 or 20) (150, 300, 1500, 3000 or 6000) A higher reserve requirement is associated with a (LARGER or SMALLER) money supply. Suppose the Federal Reserve wants to increase the money supply by $200. Maintain the assumption that banks do not…
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
Assume no change in currency holdings as deposits change. A banking system with target reserve ratio 0.20 starts with no excess reserves. If the central bank purchases $210 in government bonds from commercial banks, what will be the ultimate change in money supply (when banks return to having no excess reserves)? Round to two decimal places and do not enter the $ sign. If your answer is $6.114, enter 6.11. If your answer is $6.115, enter 6.12. If appropriate, remember to enter the - sign.
Currency in Circulation (October 2020) 40.5 billion Nigerian currency Reserves (October 2020) 34.2 billion Nigeriancurrency M1 (October 2020) 2,465.9 billion Nigeriancurrency M2 (October 2020) 2,638.8 billion Nigeriancurrency Calculate the size of the actual money (M2) multiplier in October 2020. Round your answer to one decimal place. Nigeria's central bank, N. Bank, has not set a required reserve ratio (you can treat the required reserve ratio as 0%). Calcuate the excess reserve ratio for Norway in October 2020. Enter your answer in percent form without the percent sign. Round to one decimal place.
The Federal Reserve purchases $12 million in U.S. Treasury bonds from a bond dealer, and the dealer's bank credits the dealer's account. The required reserve ratio is 15 percent, and the bank typically lends any excess reserves immediately. Assuming that no currency leakage occurs, calculate how much will the bank be able to lend to its customers following the Fed's purchase. Smillion. (Enter your response rounded to two decimal places.)