Economics In Kentucky, the quantity of money is $160 billion, the current drain ratio is 25% of deposits, and the reserve ratio is 4% of deposits. What is the value of the monetary base in Kentuckty? А. $40.2 billion В. $35.6 billion С. $37.1 billion D. $39.9 billion

Economics In Kentucky, the quantity of money is $160 billion, the current drain ratio is 25% of deposits, and the reserve ratio is 4% of deposits. What is the value of the monetary base in Kentuckty? А. $40.2 billion В. $35.6 billion С. $37.1 billion D. $39.9 billion

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

61.The preferences of households determine the: A)reserve–deposit ratio. B)currency–deposit ratio. C)size of the monetary base. D)loan–deposit ratio. 62.If the monetary base is denoted by B, rr is the ratio of reserves to deposits, and cr is the ratio of currency to deposits, then the money supply is equal to ______ divided by ______ multiplied by B. A)(rr + 1); (rr + cr) B)(cr + 1); (cr + rr) C)(rr + cr); (rr + 1) D)(rr + cr); (cr + 1) 63.The ratio of the money supply to the monetary base is called: A)the currency–deposit ratio. B)the reserve–deposit ratio. C)high-powered money. D)the money multiplier. 64.High-powered money is another name for: A)currency. B)demand deposits. C)the monetary base. D)M2. 65.If the ratio of reserves to deposits (rr) increases, while the ratio of currency to deposits (cr) is constant and the monetary base (B) is constant, then: A)it cannot be determined whether the money…
2. Discuss why fiat money can coexist with other assets that have higher rate of returns.
In an economy, savings deposits are $10,000 billion, currency is $1,500 billion, checkable deposits are $4,000 billion, money market funds and other deposits are $1,000 billion, and small time deposits are $200 billion. What are the values of M1 and M2? M1 is _______ and M2 is _______. A. $16,700 billion; $5,500 billion B. $5,500 billion; $16,700 billion C. $15,500 billion; $6,700 billion D. $1,500 billion; $20,700 billion
1. What are the total loans off the people’s bank 2. Computer money multiplier 3. Suppose a depositor comes to the bank and withdraw $2000 in cash. How much money supply will be reduced in the economy?
In an economy, the banks prefer to keep 25% of their deposits in reserve. The population likes to keep their currency holdings equal to 10% of the deposits. Initially, there was zero money in the economy. Then the central bank buys $120 worth of T-bills from a household. The household receives $120 on its checking account. 1. the commercial bank formed reserves and gave out a loan. The population allocated the lent funds between the currency in pockets and checkable accounts. Before anything else happens, how much money is there in the economy at the end of Round 1? ANSWER: 288 For question 1 How is this answer obtained?, How would you solve question 2. 2. In Round 2, more lending, borrowing, and reserve formation takes place. How much is in DEPOSITS in the economy at the end of Round 2?
4.People in other countries want to hold U.S. dollars as a unit of account. medium of exchange. standard of deferred payment. Store of value
In Maladonia in 2019, currency held by individuals and businesses was $1,122 billion; traveler's checks in circulation were $5 billion; checkable deposits owned by individuals and businesses were $1,396 billion; small time deposits were $568 billion; money market funds and other deposits were $652 billion; and M2 was, $10,600 billion. Calculate saving deposits in Maladonia in 2019. O $6,857 billion. O $3,523 billion. O $2.523 billion. O $5,857 billion. O $3,287 billion. 4
2. Suppose that there is a wave of pessimism in the economy due to Covid-19 and, as a result, the economy is operating below its natural level of output with high unemployment and low inflation. So, the central bank decided to stimulate the economy. Assume a small open economy with perfect capital mobility and a flexible exchange rate system. a) (i) Should the central bank increase or decrease the money supply if it wants to stimulate the economy? Explain. (ii) List two monetary policy tools that the central bank uses to influence the money supply and explain how each tool should be applied to be consistent with your response in (i). b) Which macroeconomic variables change immediately and in what direction? c) Which macroeconomic variables change over the short run and in what direction? d) What happens to employment and inflation? Does the rate of economic growth increase?
- Open-market operations have their initial effect on bank lending. reserves. revenues. profits.
Table 29-2. An economy starts with $10,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $9,250. The T-account of the bank is shown below. 24. Reserves Loans Assets $750 9,250 Liabilities Deposits $10,000 Refer to Table 29-2. The bank's reserve ratio is a. 7.50 percent. b. 8.12 percent. C. 92.50 percent. d. 100 percent. 25. Refer to Table 29-2. If all banks in the economy have the same reserve ratio as this bank, then the value of the economy's money multiplier is a. 1.33. b. 10.00. C. 10.81. d. 13.33. 26. Refer to Table 29-2. If all banks in the economy have the same reserve ratio as this bank, then an increase in reserves of $150 for this bank has the potential to increase deposits for all banks by a. $866.67. b. $1,666.67. C. $2,000.00. d. an infinite amount.