Peter Kotrodimos puts $100 into his checking account. The reserve requirement for the bank is.20. and the maximum the money supply would After this transaction, demand deposits increased by increase with this transaction would be $100; $600 B) $0; $400 $100; $400 $100; $500

Peter Kotrodimos puts $100 into his checking account. The reserve requirement for the bank is.20. and the maximum the money supply would After this transaction, demand deposits increased by increase with this transaction would be $100; $600 B) $0; $400 $100; $400 $100; $500

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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i
Peter Kotrodimos puts $100 into his checking account. The reserve requirement for the bank is.20.
and the maximum the money supply would
After this transaction, demand deposits increased by
increase with this transaction would be
A) $100; $600
B) $0; $400
$100; $400
D) $100; $500

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Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $200. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement Simple Money Multiplier Money Supply (Percent) (Dollars) 25 10
macmillan learning Suppose that the legal reserve ratio set by the Fed is 10% and that the Fair Bank in Fairdealing, Missouri, initially has checkable deposit equal to $240 and a reserve account of $70. A customer of Fair Bank deposits $100 into her checking account. Fair Bank loans 80% of the deposit and places the rest in its reserves at the St. Louis Fed. For simplicity, assume the borrower received the loan as cash. How much does Fair Bank have in excess reserves after the deposit and loan? Number Place the figures below to represent changes in the accounts of Fair Bank and the Federal Reserve of St. Louis' balance sheets resulting from the deposit and loan. Hint Cash: Reserves: Loans: Property: $ +$100 +$80 Balance Sheet: Fair Bank Liabilities: Net equity: +$20 -$100 -$20 +$10 -$80 -$10 Balance Sheet: Saint Louis Fed Liabilities: Cash: Property: Loans: Previous Check Answer Next Exit
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