In a 100% reserve banking, the commercial banks are required to: Select one: a. Hold part of the deposits as reserves and lend the remaining to customers b. Hold the major part of deposits as reserves and lend the remaining part to customers c. None of the answers are correct d. Lend all the deposits to customers e. Hold all the deposits as reserves

In a 100% reserve banking, the commercial banks are required to: Select one: a. Hold part of the deposits as reserves and lend the remaining to customers b. Hold the major part of deposits as reserves and lend the remaining part to customers c. None of the answers are correct d. Lend all the deposits to customers e. Hold all the deposits as reserves

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The regional Federal Reserve Banks hold deposits for individuals and the commercial banks in their district. clear checks between private banks in their district. participate in open market operations in their district. All of the answers are correct.
For this bank what would be the level of excess reserves if the required reserve ratio were 20%? A) 0 B) $300,000 C) $900,000 D) $1,000,000 E) There would be a shortfall in required reserves of $100,000
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When the reserve requirement changes, which of the following will change for an individual bank? Multiple Choice a.) transactions account balances and lending capacity b.) required reserves, excess reserves, and lending capacity c.) transactions account balances, total reserves, and excess reserves d.) total reserves, required reserves, and excess reserves
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The following tables show the balance sheets of two banks: Wide Bank and Narrow Bank. Wide Bank Balance Sheet Assets Llabilities and Net Worth Reserves $100,000 Checking deposits $300,000 Loans outstanding $250,000 Stockholders' equity $50,000 Total $350,000 Total $350,000 Narrow Bank Balance Sheet Assets Liabilities and Net Worth Reserves $0 Checking deposits $0 Loans outstanding $500,000 Stockholders' equity $500,000 Total $500,000 Total $500,000 Wide Bank is a levered bank, while Narrow Bank is an unlevered bank. Narrow Bank h banks offer an annual rate of 4% on checking deposits and charge an annual rate of 8% on loans. Wide Bank Por wiue vank, the annual interest cost on deposits is s profit of s and the annual return on loans is s Hence, Wide Bank earns a net ], which represents a rate of return of % (Hint: Round to 1 decimal place.) on stockholders' equity. For Narrow Bank, the annual interest cost on deposits is s and the annual return on loans is s . Hence, Narrow Bank earns a…
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