If the required reserve ratio is 25 percent and the Fed buys a $20,000 security from a depository institution that currently has no excess reserves, the maximum change in money supply in the economy is: O - $20,000. $5,000. $20,000. $80,000. O - S80,000.

If the required reserve ratio is 25 percent and the Fed buys a $20,000 security from a depository institution that currently has no excess reserves, the maximum change in money supply in the economy is: O - $20,000. $5,000. $20,000. $80,000. O - S80,000.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter15: Money Creation

Section: Chapter Questions

Problem 9SQ

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If banks decide to hold some of their excess reserves instead of lending them all out, then: A) the money multiplier will be less than 1 divided by the required reserve ratio. B) depositors will have to borrow more in order to increase the money supply. C) the money multiplier becomes 1 divided by the excess reserves. D) a loan of $1 will lead to a change in the money supply by a multiple amount equal to 1 divided by the required reserve ratio.
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If the required reserve ratio is 10 percent, currency in circulation is $600 billion, checkable deposits are $800 billion, and excess reserves total $0.8 billion, then the money supply is billion. $1,480.80 $1,400 $680.8 $1,300
The commercial banking system, because of a recent change in the required reserve ratio from 8 percent to 10 percent, finds that it is $50 million short reserves. If it is unable to obtain any additional reserves, it must reduce deposits and money supply by Multiple Choice $250 million. $625 million. $500 million. $50 million.
A reserve requirement of 25 percent means a bank must have at least $1,000 of reserves if its checkable deposits are Multiple Choice $4,000. $100. $1,000. $40,000.
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If the FED sets a Z of 10% and TR = $200,000 what are the required reserves: $20,000 $180,000 $800,000 $1,800,000
Assume that the banking system has a required reserve ratio (RRR) of 0.20, $500,000 in total deposits, and zero excess reserves. If the Fed lowers the required reserve ratio (RRR) to 0.10, how much unused lending capacity does the banking system now have? Multiple Choice None of these options are correct. $5,000,000.00 $50.000.00 $600,000.00 $500,000.00
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If Jason deposits $2,500 into his bank and the reserve ratio is 11%, what would be the amount of excess reserves that are immediately created? $30.25 $244.75 $275 $1,980.25 $2,225
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Suppose that Third National Bank has reserves of $20,000 and checkable deposits of $200,000. The reserve ratio is 10 percent. The bank sells $20,000 in securities to the Federal Reserve Bank in its district, receiving a $20,000 increase in reserves in return. What amount of excess reserves does the bank now have? Instructions: Enter your answer as a whole number. %24