Suppose that National Bank of Guerneville has $31 million in checkable deposits, Commonwealth Bank has $43 million in checkable deposits, and the required reserve ratio for checkable depositsis 10%. If National Bank of Guerneville has $4 million in reserves and Commonwealth has $5 million in reserves, how much in excess reserves does each bank have? (Enter your answers roundedto one decimal place.)National Bank of Guerneville has $ 0.9 million in excess reserves.Commonwealth Bank has $ 0.7 million in excess reserves.Now suppose that a customer of National Bank of Guerneville writes a check for $1 million to a real estate broker who deposits the check at Commonwealth. After the check clears, how much inexcess reserves does each bank have?National Bank of Guerneville has $0 million in excess reserves.Commonwealth Bank has $ million in excess reserves.

Step: 1To calculate the excess reserves for each bank after the check is deposited at Commonwealth…

Answered: Suppose that National Bank of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Suppose the required reserve ratio is 11%, currency in circulation is $285 billion, the amount of checkable deposits is $600 billion, and excess reserves are $192 billion. Suppose the central bank is fighting rising inflation. The FOMC wants the money supply to fall by $80 billion. Assuming the ratios you calculated in question 1 are the same, calculate the size of the open market sale that would be needed to cause a change in the money supply of $80 billion.
Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited (Dollars) 500,000 Change in Excess Reserves (Dollars) Change in Required Reserves (Dollars) Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Neha, who immediately uses the funds to write a check to Lorenzo. Lorenzo deposits the funds immediately into his checking account at Walls Fergo Bank. Then Walls Fergo Bank lends out all of its new excess reserves to Andrew, who writes a check to Teresa, who deposits the money into her account at PJMorton Bank. PJMorton lends out all of its new excess reserves to Beth in turn. Fill in the following table to show the effect of this ongoing chain of events at each bank. Enter each answer to the nearest dollar. Southeast Mutual Bank Walls Fergo Bank PJMorton Bank Increase in Deposits…
5. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. Carlos, a client of First Main Street Bank, deposits $500,000 into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess (Dollars) (Dollars) rves Chan in Required Reserves (Dollars) 500,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Amy, who immediately uses the funds to write a check to Van. Van deposits the funds immediately into his checking account at Second Republic Bank. Then Second…
The table given below shows the assets and liabilities of the Tenth National Bank, Assume that this is the only bank in the economy. Table 16 Balance Sheet of Tenth National Bank Assets Liabilities Reserves $2,730 Deposits $7,640 Loans $3,300 Total Assets $7,640 Total Liabilities $7,640 Refer to Table 16. If this Bank's depositors withdraw $935, and the Federal Reserves decreases the reserve requirement from 12% to 9%. This bank's excess reserves will change by: O $313.35 O $371.05 O -$554.60 O -$621.65 -$563.95
Suppose that Third National Bank has reserves of $20,000 and checkable deposits of $200,000. The reserve ratio is 10 percent. The bank sells $10,000 in securities to the Federal Reserve Bank in its district, receiving a $10,000 increase in reserves in return. What amount of excess reserves does the bank now have? Instructions: Enter your answer as a whole number. 2$
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. Hubert, a client of First Main Street Bank, deposits $500,000 into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 500,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Eileen, who immediately uses the funds to write a check to Clancy. Clancy…
Suppose that in a given month $52 million is deposited into the banking system while $60 million is withdrawn. Also suppose that the Fed has set the reserve requirement at 8 percent and that banks have no excess reserves at the beginning of the month. What is the maximum amount of new checkable-deposit money that can be created (or removed) by the banking system as a result of these deposits and withdrawals? Instructions: Enter your answer as a whole number. Enter a positive number to show an increase and a negative number (−) to show a decrease. $ million
Suppose Robina Bank receives a deposit of $53,589 and the reserve requirement is 3%. Answer the questions using this information. Round your answers to two decimal places. What is the amount that Robina Bank must keep on hand as required by the Federal Reserve (Fed)? What is the amount that Robina Bank must have in excess reserves from this initial deposit? What is the total change in the M1 money supply from this one deposit? keep on hand: $ excess reserves: $ total change: $ Activate Windows 11:01 PM
Suppose the reserve requirement is 15%, banks hold no excess reserves, and there are no additional currency holdings. Find the change in deposits, reserves, and loans for each bank in the following scenario. Instructions: Round your answers to two decimal places. a. Henry receives a check for $10,000 from selling his car and deposits the check Into Tennessee Bank. Use the table below to show the change in assets and liabilities at Tennessee Bank resulting from this transaction. Assets Change in Reserves: $ Change in Loans: $ b. Suppose that Julle gets a loan from Tennessee Bank in the amount from the "Loans" cell in the table in part a, and uses it to buy some tools from Todd. Todd deposits the money from Julle Into Kentucky Bank. Use the table below to show the change in assets and llabilities at Kentucky Bank resulting from this transaction. Assets Change in Reserves: $ Change in Loans: $ Liabilities Change in Deposits: $ Assets Change in Reserves: $ Change in Loans: $ Liabilities…
Suppose that Kesha deposits $7,000 into her savings account at First Bank. The reserve requirement facing First Bank is 9%. Instructions: Enter your answer as a whole number, If you are entering a negative number include a minus sign. a. Use this information to show how First Bank's assets and liabilities Initially change when Kesha deposits the $7000 in the bank. A Simple Bank Balance Sheet Assets Liabilities Change in Reserves: $ Change in Deposits: $ b. How much money can First Bank lend out to other people? c. Now suppose that First Bank holds no excess reserves and lends out all of the excess reserves resulting from Kesha's deposit. How do First Bank's assets and labilities change? A Simple Bank Balance Sheet Assets Liabilities Change in Reservesi Change in Loans
1.4 Suppose you transfer $4,000 from your money market mutual fund account to your checking account. What is the immediate impact of this transfer on M1 and M2? 1.5 Why do banks create money? Do they create money to help the Federal Reserve control the money supply or is there a more basic reason? 1.6 Suppose that the required reserve ratio is 2 percent, and you deposit $100,000 of currency into Chase Bank. What is the potential increase in deposits in the banking system brought about by your deposit? What is the potential change in the money supply?
Assuming a bank only keeps enough of its reserves to meet its reserve requirement, how much money is created after the Federal Reserve purchases $40,000 worth of bonds from a bank (this means they deposit $40,000 in that bank's reserve account) and there is a 25% reserve requirement? Hint: enter your answer without a comma or $ sign. Example: if the answer is $44,000 enter 44000 as your answer. Show Transcribed Text Assuming a bank only keeps enough of its reserves to meet its reserve requirement, how much money is created when a bank receives a deposit from an individual of $60,000 and there is a 10% reserve requirement. Hint: enter your answer without a comma or $ sign. Example: if the answer is $44,000 enter 44000 as your answer.

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