New Deposits (new reserves) New Required Reserves Checkable Deposits Created by Extending New Loans (equal to new excess reserves) (1) Bank A RM1,000 RM100 8. Refer to Exhibit 1. What ringgit amount goes in blank (1)? A. RM1,000 B. RM800 C. RM90 D. RM900 Refer to Exhibit 1. What does the required reserve equal? A. 9 percent B. 10 percent C. 11 percent D. 15 percent 9. Refer to Exhibit 1. What does the simple deposit multiplier equal? А. 4 В. 6.67 C. 8.5 10. D. 10

New Deposits (new reserves) New Required Reserves Checkable Deposits Created by Extending New Loans (equal to new excess reserves) (1) Bank A RM1,000 RM100 8. Refer to Exhibit 1. What ringgit amount goes in blank (1)? A. RM1,000 B. RM800 C. RM90 D. RM900 Refer to Exhibit 1. What does the required reserve equal? A. 9 percent B. 10 percent C. 11 percent D. 15 percent 9. Refer to Exhibit 1. What does the simple deposit multiplier equal? А. 4 В. 6.67 C. 8.5 10. D. 10

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that the currency-deposit ratio is 0.5, the required reserve ratio is 0.1, and the excess reserves to deposit ratio is 0.15. If the monetary base is $2 trillion, fınd (a) the amount of currency in circulation in billions of dollars (b) required reserves in billions of dollars (c) excess reserves in billions of dollars.
The average vault cash for the computation period has been estimated to be $1 million per day.a. What level of average daily reserves is required to be held by the bank during the maintenance period, May 11 – 24?b. Is the bank in compliance with the requirements?c. What amount of required reserves can be carried over to the following computation period?d. If the average cost of funds to the bank is 8 percent per year and deposits at the Fed pay 0.5 percent, what is the effect on the income statement for this bank for this reserve period?
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29. The required reserve ratio for the bank in Table A is A) 18 percent. B) 10 percent. C) 12 percent. D) 16 percent.
9. How would you incorporate security considerations/costs into the transactions demand model? What would this imply for the demand for currency in a relatively insecure urban environment (a) compared with a relatively safe one, (b) when owner-identiﬁed smart cards become available? Do these factors affect the demand for demand deposits? How would the proportion of currency to demand deposits be affected in these cases? 10. Can the transactions demand model be used to explain why ﬁnancial innovations in recent decades have reduced the transactions demand for M1? 11. Are transactions demand models useless, as Sprenkle (1969) argued? If they are, how would you explain the demand for M1 or just for demand deposits in the economy?
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9 If the interest rate................... opportunity cost of holding money decreases, and the quantity demanded of money increases; decreases decreases; increases £0000 increases; also increases does not change; does not change 10 If the total deposits-on-demand in Bank A total $500 mil and the required reserve ratio is 2.5 percent, then required reserves at Bank A equal more than 1,300,000,000 equal to 13,000,000 less than 13,000,000 more than 13,000,000
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Because passbook savings are interest rates. Seleccione una: a less: lower Ob. more: higher Oc more lower Od less, higher liquid for the depositor than checking accounts, they earn
A bank has a 5 percent reserve requirement, $4,000 in deposits, and has loaned out all it can given the reserve requirement. Select one: a.None of them. b.lt has $1,000 in reserves and $3,000 in loans. c.lt has $20 in reserves and $4,980 in loans. d.It has $200 in reserves and $4,800 in loans.
Haley sells a share of stock and deposits the proceeds into her saving account at a bank. a. Her assets as M1- increases, decreases, or stays the same b. Her assets as M2 -increases, decreases, or stays the same c. Reserves at her bank- increases, decreases, or stays the same
The central bank buys $10,000 worth of bonds in the open market from Elaine, who deposits the proceeds in her checking account at MSM Bank. The required reserve ratio is 5%. (a) What is the amount by which MSM Bank’s liabilities have changed? Explain. (b) Calculate the change in required reserves for MSM Bank. Show your work. (c) What is the dollar value of the maximum amount of new loans MSM Bank can initially make as a result of Elaine’s deposit? Explain. (d) Based on the central bank’s open-market purchase of bonds, calculate the maximum amount by which the money supply can change throughout the banking system. Show your work. (e) How will the change in the money supply in part (d) affect aggregate demand and the price level in the short run? Explain.