Problem 14-02 algo Assume that the following data describe the current condition of the commercial banking system: Total reserves: Transactions deposits: Cash held by public: Required reserve ratio: Value $70 billion $600 billion $250 billion 0.10 a. How large is the money supply (M1)? b. Are the banks fully utilizing their lending capacity? Banks currently have Now assume that the public deposited another $20 billion in cash in transactions accounts. c. What would happen to the money supply initially (before any lending takes place)? Assuming the $20 billion in cash is not new money in the system, M1 will d. How much would the total lending capacity of the banking system be after this portfolio switch? e. How large would the money supply be if the banks fully utilized their lending capacity? f. What three steps could the Fed take to offset the potential growth in M1? reserve requirements Increase Increase Sell the discount rate bonds $ not change 850 billion 10.0 billion in excess reserves. billion billion

Problem 14-02 algo Assume that the following data describe the current condition of the commercial banking system: Total reserves: Transactions deposits: Cash held by public: Required reserve ratio: Value $70 billion $600 billion $250 billion 0.10 a. How large is the money supply (M1)? b. Are the banks fully utilizing their lending capacity? Banks currently have Now assume that the public deposited another $20 billion in cash in transactions accounts. c. What would happen to the money supply initially (before any lending takes place)? Assuming the $20 billion in cash is not new money in the system, M1 will d. How much would the total lending capacity of the banking system be after this portfolio switch? e. How large would the money supply be if the banks fully utilized their lending capacity? f. What three steps could the Fed take to offset the potential growth in M1? reserve requirements Increase Increase Sell the discount rate bonds $ not change 850 billion 10.0 billion in excess reserves. billion billion

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter6: Cash And Receivables

Section: Chapter Questions

Problem 12C: Researching GAAP Situation Hamilton Company operates in an industry with numerous competitors. It is...

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Shen is heading out to lunch. He goes to the bank and withdraws $30 from his savings account. He heads to a local deli that sells half sub sandwiches for $4.99 and whole subs for $7.99. Shen decides that he's pretty hungry and goes for the whole. He pays with a $10 bill and tells the cashier to keep the change. Identify what role money plays in each of the following parts of the story. Hint: Select each role only once. Role of Money Shen can easily determine that the whole sandwich, while twice as long as the half, is priced at less than twice as much. Shen accumulates money in his savings account for future purchases. Shen buys his lunch with a $10 bill. Medium of Exchange O Unit of Account Store of Value O Oo
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Use the following data to answer the below question. Required reserve $50 Checkable deposits $500 Savings Deposits $50 Excess reserves $180 Currency held by the public $160 The money multiplier is 1.69 The Fed conducts an open market purchase of $81. What will be the change in the money supply $ 136.89 answer? /Round to 2 decimal places/ What is the change in checkable deposits? 103.85 These are the correct answers and I know that 1.69 * $81 = $136.89, but I don't know how to get the 103.85 change in checkable deposits. Please help
What is the money supply of the economy-that which will circulate in the economy