1. Legal reserve of a commercial bank A consists of cash in vault and deposits in the central bank.A question requiring a 'True/False' answer.(Required)O True O False2.Required reserve can be used to make loans, purchase securities.A question requiring a 'True/False' answer.(Required)O True O False3. An individual bank can create a multiple amount of deposit money from any given injection ofreserves by using its excess reserve to make loans.A question requiring a 'True/False' answer.(Required)O True O False4.If the Fed set the required reserve requirement ratio to be 0.02, bank A wishes to maintain 0.03dollar in excess reserve for every 1 dollars in transaction deposit.What is the deposit multiplier?| (Required)If bank A found themselves with 10 in excess reserve, what is the maximum amount of newdeposits (loan) created by the banking system?(Required)

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question requiring a 'True/False' answer.(Required) O True O False Required reserve can be used to make loans, purchase securities. question requiring a 'True/False' answer. (Required) O True O False . An individual bank can create a multiple amount of deposit money from any given in eserves by using its excess reserve to make loans. question requiring a 'True/False' answer.(Required) O True O False If the Fed set the required reserve requirement ratio to be 0.02, bank A wishes to ma lollar in excess reserve for every 1 dollars in transaction deposit.

question requiring a 'True/False' answer.(Required) O True O False Required reserve can be used to make loans, purchase securities. question requiring a 'True/False' answer. (Required) O True O False . An individual bank can create a multiple amount of deposit money from any given in eserves by using its excess reserve to make loans. question requiring a 'True/False' answer.(Required) O True O False If the Fed set the required reserve requirement ratio to be 0.02, bank A wishes to ma lollar in excess reserve for every 1 dollars in transaction deposit.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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17. Assume that the required reserve ratio is 25%. If the Fed buys $5 million worth of government bonds from the public, the maximum change in the money supply is: a) -$20 million. (b) -$12.5 million. (c) $12.5 million. (d) $20 million.
Northern Bank: Balance Sheet Assets Liabilities Deposits Capital $7,000 $1,000 $8,000 Reserves $420 $7,580 $8.000 Loans Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio, Northern Bank must and O A. increase its reserves by $140; decrease its deposits by $140 O B. increase its reserves by $280; increase its loans by $380 OC. increase its reserves by $280; decrease its deposits by $280 O D. increase its reserves by $140; decrease its loans by $140 O E. not change its reserves; not change its deposits
Your bank has the following balance sheet: Assets Liabilities Checkable Reserves $90 million $380 million deposits $130 Securities million Loans $200 million Bank capital $40 million If the required reserve ratio is 20%, what will be the size of this bank (as measured by its total assets or liabilities) after $20 million deposit outflow if it just meets reserve deficiency by taking out a discount loan from the Federal Reserve? $402 million $400 million. OOOO $420 million. $412 million.
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.
Interest Rate Transactions Demand for Money Asset Demand for Money Money Supply 2% $220 $300 $460 4 220 280 460 6 220 260 460 8 220 240 460 10 220 220 460 Based on the given table, an increase in the money supply of $20 billion will cause the equilibrium interest rate to Multiple Choice fall by 4 percentage points. fall by 2 percentage points. Correct rise by 4 percentage points. rise by 2 percentage points.
-The Golden State Bank has total cash reserves of $110,000, deposits of $200,000, and loans of $90,000. The reserve requirement is 5 percent. This bank can make additional loans up to the amount of: $10,000 $5,500 $100,000 $190,000
If a bank gets $100 in new reserves from the Fed and the required-reserve ratio is 0.2, then the O rate of interest falls in the economy O money supply grows by $500 O money multiplier is 5 O all of the above
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.
18) A single commercial bank must meet a 25% reserve requirement. If it initially has reserves and then $2,000 in cash is deposited in the bank, it can increase its loans by a maximum of no excess A) $2,000. B) $1,500. C) S1,250. D) S1,750.
If your grandmother gives you a $20 bill and you deposit that into your and M2 Money. checking account, then M1 money. O stays the same; stays the same O decreases; increases increases; increases O increases; decreases increases; stays the same
Deposit Reserve Requirement Money Multiplier Potential Money Creation $1,000 10% From above $1,000 20% From above $1,000 25% From above With a deposit of $1,000 and the reserve requirement of 10% what is the potential money creation? Group of answer choices $5,000 none of the above $10,000 $4,000
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.