If a bank that faces a 25 percent reserve ratio received a deposit of $30,000 andmakes a loan to a customer for $10,000, what is the consequence if the bank thendeposits the rest of the funds at the Federal Reserve?Excess reserves increase by $30,000.Excess reserves increase by $20,000 and required reserves increase by $10,000.Excess reserves increase by $12,500 and required reserves increase by $7,500.Required reserves increase by $17,500.Reserves are not affected.

The Reserve ratio is the portion of the total amount that a bank has to reserve.

If a bank that faces a 25 percent reserve ratio received a deposit of $30,000 and makes a loan to a customer for $10,000, what is the consequence if the bank then deposits the rest of the funds at the Federal Reserve? Excess reserves increase by $30,000. O Excess reserves increase by $20,000 and required reserves increase by $10,000. O Excess reserves increase by $12,500 and required reserves increase by $7,500. Required reserves increase by $17,500. Reserves are not affected.

If a bank that faces a 25 percent reserve ratio received a deposit of $30,000 and makes a loan to a customer for $10,000, what is the consequence if the bank then deposits the rest of the funds at the Federal Reserve? Excess reserves increase by $30,000. O Excess reserves increase by $20,000 and required reserves increase by $10,000. O Excess reserves increase by $12,500 and required reserves increase by $7,500. Required reserves increase by $17,500. Reserves are not affected.

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

view picture
51)Consider the following for National City Bank. If the required reserve ratio is 4 percent, the excess reserves of National City Bank is Assets Liabilities Reserves $10,000 Deposits $100,000 Loans $90,000 Select one: a. $10,000 b. $6,000 c. $3,000 d. $4,000
9
The table below shows information for United Bank. Deposits Reserves Reserve Requirement $300 million $33 million 10% Which of the following statements is true concerning United Bank in the federal funds market? Multiple Choice C O United Bank will lend $33 million reserves in the federal funds market. O United Bank will borrow $30 million reserves in the federal funds market. United Bank will lend $3 million reserves in the federal funds market. United Bank will borrow $3 million reserves in the federal funds market. @ a $ % Λ &
2
Suppose that Kesha deposits $8,000 into her savings account at First Bank. The reserve requirement facing First Bank Is 20%. Instructions: Enter your answer as a whole number. If you are entering a negative number include a minus sign. a. Use this information to show how First Bank's assets and liabilities Initially change when Kesha deposits the $8,000 in the bank. A Simple Bank Balance Sheet Assets Change in Reserves: $ Liabilities Change in Deposits: $ b. How much money can First Bank lend out to other people? $ c. Now suppose that First Bank holds no excess reserves and lends out all of the excess reserves resulting from Kesha's deposit. How do First Bank's assets and liabilities change? A Simple Bank Balance Sheet Assets Change in Reserves: $ Change in Loans: $ Liabilities
M1
1.What is the money multiplier if the target reserve ratio ofbanks is 4%? 2. If the target reserve ratio for a bank is 5%, deposits are $1billion, and loans are $800 million, what are the targetreserves?$50 million•80%$40 million$200 million3. Which measurement of the money in Canada will be the largest? 4. Is there more money or currency in Canada?5.
1. If the reserve ratio is 10%, a bank with $1,000 in deposits has required reserves of $ Type your answer here 2. If a bank is holding required reserves of $100 to support $500 in deposits, the reserve ratio is Type your answer here 3. If a bank with $500 in deposits is holding reserves of $50 when the reserve ratio is 10%, the bank has excess reserves of $ %. Type your answer here
10. Banks in the country of Mistania have a total of $17000 in required reserves and $276000 in checkable deposits. Calculate Mistania's required reserve ratio:
Note. Don't use Ai bot
2. Suppose the required reserve ratio is 11%, currency in circulation is $285 billion, the amount of checkable deposits is $600 billion, and excess reserves are $192 billion. Suppose the central bank is fighting rising inflation. The FOMC wants the money supply to fall by $80 billion. Assuming the ratios you calculated in question 1 are the same, calculate the size of the open market sale that would be needed to cause a change in the money supply of $80 billion.