Table 1 First Charter Bank Assets Liabilities Reserves $800 $400 $1.200 Deposits Net Worth Total Loans Total Refer to Table 1. The required reserve ratio is 25%. If the First Charter Bank is meeting its reserve requirement and has no excess reserves, its reserves equal Lütfen birini seçin: O A $300 O B. $600 O C. $O O D. $100 O E. $200 The Italian economy can be characterized by Equation 24.1.

Table 1 First Charter Bank Assets Liabilities Reserves $800 $400 $1.200 Deposits Net Worth Total Loans Total Refer to Table 1. The required reserve ratio is 25%. If the First Charter Bank is meeting its reserve requirement and has no excess reserves, its reserves equal Lütfen birini seçin: O A $300 O B. $600 O C. $O O D. $100 O E. $200 The Italian economy can be characterized by Equation 24.1.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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QUESTION 11 If the Federal Reserve purchases $250 million in US Treasury Securities, what will happen to overall bank deposits under the following assumptions: Banks convert 100% of excess reserves to loans, borrowers return 70% of cash to bank, and banks' reserve requirement is 10% O $437.5 million O $625 million O $833.33 million O $2500 million O $1750 million
QUESTION 19 Bank run refers to that O A. the central bank raises the reserve ratio of banks in the time of financial crisis. O B. the central bank runs to bail out banks. O C. many banks' depositors try to withdraw their funds because they fear a bank failure. OD. investment banks and hedge funds lend to each other on very short terms. QUESTION 20 Which of the following is true about the money creation by banks? O A. Money creation is the process of changes in the money supply through depositing and lending in a fractional-reserve banking system. O B. The amount of money as an asset increases, making the economy wealthier. O C. The central bank increases the monetary base. O D. Depositors withdraw funds from banks, holding them in cash.
Which set of actions could the central bank use to increase the money supply? Select one: O a. an open market purchase and a tax cut O b. a discount rate cut and an open market sale O c.a reduction in the required reserve ratio and an open market purchase O d. a reduction in the required reserve ratio and an open market sale
Question 3 In the market for reserves, suppose that the federal funds rate and discount rate are both at 7%. If the Federal Reserve Bank sells securities in the open market, then the equilibrium rate for reserves will and the amount of borrowed reserves will O not change; decrease O not change; increase O rise; increase O rise; decrease Question 4 When the Federal Reserve Bank lowers the reserve requirements for commercial banks in the economy, this causes the curve for reserves to decrease and so the curve shifts to the ----- O demand; right O demand: left O supply; right O supply; left
If a bank gets $90 in new reserves from the Fed and the required-reserve ratio is 0.1, then the maximum amount by which total deposits in the economy can increase is O $900 O $90 O $9 O $80
Interest Rate 4% 3 2. O2 percent 0 percent 4 percent a 3 percent MS b d Refer to Figure 15-1. At which interest rate is there an excess money supply? Money Demand Quantity of Money
1. Suppose that the reserve requirement against deposits is 0%, but that cautious banks voluntarily hold 5% of their deposits in reserve, just in case and that people hold no currency-all money is held in the form of checking deposits. a. Suppose that the Federal Reserve purchases $30,000 worth of government bonds from Ellen (a private citizen), and that Ellen deposits all of the proceeds from the sale into her checking account at Z Bank. Construct a balance sheet, with assets on the left and liabilities on the right, to show how Ellen's deposit creates new assets and liabilities for Z Bank. b. How much of this new deposit can Z Bank lend out? Assume that it lends this amount to George, who then deposits the entire amount into his account at Y Bank. Show this on Y Bank's balance sheet. c. How much of this new deposit can Y Bank lend out? Suppose Joe takes out a loan for this amount from Y Bank and deposits the money into his account at X Bank. Show this on X Bank's balance sheet. d.…
Suppose the required reserve ratio is 10% and a bank receives a $10 million deposit into a checking account. By how much will deposits change in the banking system? (assume that the banking system currently has no excess reserves) Select one: $100 million. O $90 million. $10 million. O $110 million. Clear my choice
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Suppose the required reserve ratio increased from 5 percent to 10 percent, and suppose banks kept no excess reserves. Ceteris paribus, it follows that the "money" (or "deposit") multiplier would: Select one: O a. decrease from 20 to 10. O b. increase from 5 to 10. O c. decrease from 10 to 20. O d. decrease from 1/5 to1/10.
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. Suppose that the T-account for Nan Bank Inc. is as follows:Assets LiabilitiesReserves $100,000Loans $400,000 Deposits $500,000. If the Bank of Canada requires banks to hold 5 percent of deposits reserves, how much in excess reserves does Nan Bank Inc. now hold?Assume that all other banks hold only the required amount of reserves. IfNan Bank Inc. decides to reduce its reserves to only the required amount, byhow much would the economy's money supply increase?