Suppose there is a small island economy out in the South Pacific known as Volunteer Island. Following is a complete list of assets on the island. Use this information for the next two questions. $10,000 in cash and coins located throughout the island Another $2,000 cash and coins locked away in bank vaults 10 gold statues of bluetick coonhound dogs, all named "Smokey ," approximate value of $1,000,000 $7,000 in checking account deposits $20,000 in savings accounts deposits $2,500 worth of Volunteer Island government savings bonds, held by citizens Total real estate property valued at $2,000,000 $4,000 held in small time - deposits What is amount of M1 circulating on Volunteer Island?m

Suppose there is a small island economy out in the South Pacific known as Volunteer Island. Following is a complete list of assets on the island. Use this information for the next two questions. $10,000 in cash and coins located throughout the island Another $2,000 cash and coins locked away in bank vaults 10 gold statues of bluetick coonhound dogs, all named "Smokey ," approximate value of $1,000,000 $7,000 in checking account deposits $20,000 in savings accounts deposits $2,500 worth of Volunteer Island government savings bonds, held by citizens Total real estate property valued at $2,000,000 $4,000 held in small time - deposits What is amount of M1 circulating on Volunteer Island?m

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

Suppose there is a small island economy out in the
South Pacific known as Volunteer Island. Following is a
complete list of assets on the island. Use this
information for the next two questions. $10,000 in cash
and coins located throughout the island Another $2,000
cash and coins locked away in bank vaults 10 gold
statues of bluetick coonhound dogs, all named "Smokey
," approximate value of $1,000,000 $7,000 in checking
account deposits $20,000 in savings accounts deposits
$2,500 worth of Volunteer Island government savings
bonds, held by citizens Total real estate property valued
at $2,000,000 $4,000 held in small time - deposits What
is amount of M1 circulating on Volunteer Island?m

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