Suppose that: r = required reserve ratio = 0.10 c = {C/D} = currency ratio = 0.30 e = {ER/D} = excess reserve ratio = 0.03 MB = the monetary base = $3,000 billion 1+c Given that the formula for the money multiplier is find the value for M, the money supply. r+ e +c The money supply is $ billion. (Round your response to the nearest whole number.) Use the money multiplier to find the new value for the money supply if open market operations increase the monetary base by $100 billion. The money supply is now $ billion. (Round your response to the nearest whole number.)

Suppose that: r = required reserve ratio = 0.10 c = {C/D} = currency ratio = 0.30 e = {ER/D} = excess reserve ratio = 0.03 MB = the monetary base = $3,000 billion 1+c Given that the formula for the money multiplier is find the value for M, the money supply. r+ e +c The money supply is $ billion. (Round your response to the nearest whole number.) Use the money multiplier to find the new value for the money supply if open market operations increase the monetary base by $100 billion. The money supply is now $ billion. (Round your response to the nearest whole number.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose the Federal Reserve increases the amount of reserves by $150 million and the total money supply increases by $750 million. Instructions: Enter your answers as a whole number. a. What is the money multiplier? b. Using the money multiplier from part a, how much will the money supply change if the Federal Reserve increases reserves by $50 million? 2$ million
Suppose the simplified consolidated balance sheet shown below is for the entire commercial banking system and that all figures are in billions of dollars. The reserve ratio is 25 percent. Assets Reserves Securities Loans $ 1 52 48 100 (a) $ (b) Instructions: Enter your answers as a whole number. billion Liabilities and net worth Checkable deposits a. What is the amount of excess reserves in this commercial banking system? $ billion What is the maximum amount the banking system might lend? $ billion $ 1' 200 (a) Show in columns 1(a) and 1'(a) how the consolidated balance sheet would look after this amount has been lent. Enter these new values in the gray shaded cells of the given table. What is the size of the monetary multiplier? (b) b. Using the original figures, answer the questions in part a assuming the reserve ratio is 20 percent. What is the amount of excess reserves in this commercial banking system?
The reserve requirement, open market operations, and the money supply Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is checkable deposits. To simplify the analysis, suppose the banking system has total reserves of $500. Determine the simple money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement Simple Money Multiplier Money Supply (Percent) (Dollars) 5 10 A lower reserve requirement is associated with a ______(SMALLER/LARGER) money supply. Suppose the Federal Reserve wants to increase the money supply by $200. Again, you can assume that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%, the Fed will use open-market operations to _____(BUY/SELL)$ ________ worth of U.S. government bonds. Now, suppose that, rather than…
Suppose a central bank has a required reserve ratio of 6.6% for all banks and the central bank changes reserves at one of these banks by $536. By how much will the money supply change, at most, after all the effects of the money multiplier? (Round this to two digits after the decimal and enter this value as either a positive value or a negative value without the dollar sign.)
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
Which of the following is a TRUE statement? Explain why. 1. If the currency drain is 20 percent, and the desired reserve ratio is 20 percent, the real-life money multiplier is 4. 2. If a country has $50 billion in bank reserves, $100 billion in currency held by the public, and $500 billion in bank deposits, the real-life money multiplier is 4.
Let's say that: rr = the reserve ratio = .85% %3D C = total currency in circulation = $1060B D = total checkable deposits =$1,800B ER = total excess reserves = $2080B %3D %3D M = money supply (M1) = C + D= $2860B %3D Derive, numerically, the money multiplier (m); given the above values.
Suppose that the central bank has increased the money supply such that there is an additional $989699 in excess reserves. If the reserve ratio is 4.0 percent, what is the maximum increase in money supply? Round your answer to the nearest dollar.
Assume that a bank receives a deposit of $1,000 in cash, puts aside $200 as required reserves, and makes a loan of $800, these transactions imply that: a) the money supply by the whole banking system can increase by $1,000. b) the money supply by the whole banking system can increase by $4,000. c) the money supply by the whole banking system can increase by $8,000.
Suppose that the required reserve ratio is equal to 10%. If the currency-to-deposit ratio is fixed at 20%, what is the money multiplier? If the monetary base is $100 million, what is the money supply?
Suppose the Federal Reserve’s trading desk buys $500,000 in T-bills from a securities dealer who then deposits the Fed’s check in Best National Bank. Use a balance sheet to show the impact on the bank’s loans. Consider the money multiplier and assume the required reserve ratio is 10 percent. What is the maximum increase in the money supply that can result from this open market transaction?
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 $100. 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) 15 15 150 10 10 100