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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When the first deposit deposited in the bank is 250,000 TL and the required reserve ratio determined by the central bank is 10%, how much is the total loan volume created? a. 1.000.000 b. 2.250.000 C. 2.500.000 d. 25.000.000 e. 750.000
5. Which of the following characteristics of money is associated with the base good being easily portable? a. Unit of account b. Store of value c. Medium of exchange
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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.
2. Consider the following data (all values are in billions of dollars): (b) Currency Transactional deposits Bank reserves June 1930 June 1931 June 1932 $ 3.681 3.995 4.959 21.612 19.888 15.490 3.227 3.307 2.829 (a) Calculate the values for each period for the currency-deposit ratio, the ratio of total reserves to deposits, the monetary base, M1, and the money multiplier. Can you explain why the currency-deposit ratio and the ratio of total reserves to deposits moved as they did between 1930 and 1932(Great depression era)?
a). Calculate excess reserves when required reserve ratio on demand deposit is 14% and required reserve ratio on time deposit is 3%. b). suppose that required reserve ratios are changed to 16% on demand deposits and 0% on time deposits. Calculate excess reserves c. suppose bank sells 3 million in securities on the open market. Calculate the change in the bank's excess reserves when the required reserve ratio on demand deposits is 14%
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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?
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