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Refer to the information provided in Scenario 10.1 below to answer the questions that follow. SCENARIO 10.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up. New Deposit Required Reserve $100,000.00 $95,000.00 $90,250.00 $85, 737.50 Loans $95,000.00 $90,250.00 $85,737.00 $81,450.63 Bank No. 1 $5,000.00 $4,750.00 $4,512.50 Bank No. 2 Bank No. 3 Bank No. 4 $4,286.90 40) Refer to Scenario 10.1. What is the requ A) 4% ed reserve ratio? B) 5% C) 8% D) 10% Answer: B Diff: 2 Topic: How Banks Create Money Skill: Arnalytic AACSB: Analytic Skills 41) Refer to Scenario 10.1. What is the money multiplier in this economy? A) 20 C) 50 B) 10 D) 16.67 Answer: A Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 42) Refer to Scenario 10.1. Based on the initial $100,000 deposit, the money supply will, at most, expand to A) $1 million. B) $2 million. C) $50 million. D) $16.67 million. Answer: B Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 43) Refer to Scenario 10.1. If the required reserve ratio were changed to 10%, total loans of Bank No. 2 will change to A) 81,000. B) 90,000. C) 85,000. D) 77,440. Answer: A Diff: 3 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills

Refer to the information provided in Scenario 10.1 below to answer the questions that follow. SCENARIO 10.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up. New Deposit Required Reserve $100,000.00 $95,000.00 $90,250.00 $85, 737.50 Loans $95,000.00 $90,250.00 $85,737.00 $81,450.63 Bank No. 1 $5,000.00 $4,750.00 $4,512.50 Bank No. 2 Bank No. 3 Bank No. 4 $4,286.90 40) Refer to Scenario 10.1. What is the requ A) 4% ed reserve ratio? B) 5% C) 8% D) 10% Answer: B Diff: 2 Topic: How Banks Create Money Skill: Arnalytic AACSB: Analytic Skills 41) Refer to Scenario 10.1. What is the money multiplier in this economy? A) 20 C) 50 B) 10 D) 16.67 Answer: A Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 42) Refer to Scenario 10.1. Based on the initial $100,000 deposit, the money supply will, at most, expand to A) $1 million. B) $2 million. C) $50 million. D) $16.67 million. Answer: B Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 43) Refer to Scenario 10.1. If the required reserve ratio were changed to 10%, total loans of Bank No. 2 will change to A) 81,000. B) 90,000. C) 85,000. D) 77,440. Answer: A Diff: 3 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills

ECON MACRO
ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 2.3P
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Refer to the information provided in Scenario 10.1 below to answer the questions that follow. SCENARIO 10.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up. New Deposit Required Reserve $100,000.00 Loans Bank No. 1 $5,000.00 $95,000.00 Bank No. 2 $95,000.00 $4,750.00 $90,250.00 Bank No. 3 $90,250.00 $4,512.50 $85,737.00 $81,450.63 Bank No. 4 $85, 737.50 $4,286.90 40) Refer to Scenario 10.1. What is the required reserve ratio? B) 5% C) 8% A) 4% D) 10% Answer: B Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 41) Refer to Scenario 10.1. What is the money multiplier in this economy? A) 20 B) 10 C) 50 D) 16.67 Answer: A Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 42) Refer to Scenario 10.1. Based on the initial $100,000 deposit, the money supply will, at most, expand to A) $1 million. B) $2 million. C) $50 million. D) $16.67 million. Answer: B Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 43) Refer to Scenario 10.1. If the required reserve ratio were changed to 10%, total loans of Bank No. 2 will change to A) 81,000. В) 90,000. C) 85,000. D) 77,440. Answer: A Diff: 3 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills
Transcribed Image Text:Refer to the information provided in Scenario 10.1 below to answer the questions that follow. SCENARIO 10.1: The following table shows the changes in deposits, reserves, and loans of 4 banks as a result of a $100,000 initial deposit in Bank No. 1. Assume all banks are loaned up. New Deposit Required Reserve $100,000.00 Loans Bank No. 1 $5,000.00 $95,000.00 Bank No. 2 $95,000.00 $4,750.00 $90,250.00 Bank No. 3 $90,250.00 $4,512.50 $85,737.00 $81,450.63 Bank No. 4 $85, 737.50 $4,286.90 40) Refer to Scenario 10.1. What is the required reserve ratio? B) 5% C) 8% A) 4% D) 10% Answer: B Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 41) Refer to Scenario 10.1. What is the money multiplier in this economy? A) 20 B) 10 C) 50 D) 16.67 Answer: A Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 42) Refer to Scenario 10.1. Based on the initial $100,000 deposit, the money supply will, at most, expand to A) $1 million. B) $2 million. C) $50 million. D) $16.67 million. Answer: B Diff: 2 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills 43) Refer to Scenario 10.1. If the required reserve ratio were changed to 10%, total loans of Bank No. 2 will change to A) 81,000. В) 90,000. C) 85,000. D) 77,440. Answer: A Diff: 3 Topic: How Banks Create Money Skill: Analytic AACSB: Analytic Skills
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