### Simple Deposit Multiplier FormulaThe simple deposit multiplier formula is essential for understanding how initial bank reserves can lead to a larger increase in checking account deposits. Below are multiple-choice options for the formula:#### Options:A. Simple Deposit Multiplier $ = \frac{1}{1 - RR} $B. Simple Deposit Multiplier $ = \frac{(1 - RR)}{RR} $C. Simple Deposit Multiplier $ = \frac{1}{RR} $D. Simple Deposit Multiplier $ = \frac{-RR}{1 - RR} $Where $ RR $ represents the required reserve ratio.#### Question:If the required reserve ratio is 0.10, the maximum increase in checking account deposits that will result from an increase in bank reserves of $5,000 is \$ [____]. (Enter your response as an integer.)This question asks you to identify the correct formula for the simple deposit multiplier and apply it to calculate the maximum increase in checking account deposits. Make sure to enter your response in the provided blank space as an integer.

The simple deposit multiplier is a concept in macroeconomics that describes the potential increase…

The formula for the simple deposit multiplier is O A. O C. Simple Deposit Multiplier = Simple Deposit Multiplier = 1 1-RR 1 RR OB. O D. Simple Deposit Multiplier = Simple Deposit Multiplier = (1-RR) RR - RR 1-RR If the required reserve ratio is 0.10, the maximum increase in checking account deposits that will result from an increase in bank reserves of $5,000 is $ (Enter your response as an integer.)

The formula for the simple deposit multiplier is O A. O C. Simple Deposit Multiplier = Simple Deposit Multiplier = 1 1-RR 1 RR OB. O D. Simple Deposit Multiplier = Simple Deposit Multiplier = (1-RR) RR - RR 1-RR If the required reserve ratio is 0.10, the maximum increase in checking account deposits that will result from an increase in bank reserves of $5,000 is $ (Enter your response as an integer.)

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

Need hlep with this economics question
0 Question 16 Suppose the following: • Smokey Bank has total deposits of $600,000. In addition, it currently has outstanding loans in the amount of $400,000 Finally, the required reserve ratio is 15%. . . What is the money multiplier? O 0.90 0.10 090 15 O 6.67
Suppose the Federal Reserve has set the money supply at $4 million. The table below shows the interest rate and total demand for money. Demand (in millions) Interest Rate 20% 15 10 5 0 $1 2 3 4 5 What is the equilibrium interest rate? Multiple Choice C O 10 percent 20 percent 5 percent O percent < # % & 8888886 $ @ 2 3 4 5 7
If Bank A has $3.8 million in total deposits, $860,000 in total reserves, and faces a 12 percent reserve requirement, the amount of money that Bank A could initially create by loaning out their excess reserves is: O $100,000. O $385,000 $404,000 O $756,800 O $3,366,667
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
Pls select the correct option and exlplain it.
By using open market operations, the Federal Reserve O a. adjusts the supply AND demand of reserves to keep the federal funds interest rate equal to its target. O b. adjusts the supply of reserves to keep the federal funds interest rate equal to its target. Oc controls banks' demand for reserves, thereby keeping the federal funds rate equal to its target. O d. adjusts the demand of reserves to keep bank rates in line with the federal funds rate target. O e. None of these answers is correct.
29
Using the simply multiple deposit multiplier model, the Federal Reserve Bank desires to increase the size of checkable deposits by $50,500. If the required reserve ratio is 5%, then the Fed needs to purchase worth of securities in the open market. O $2,445 O $2,650 O $2,525 O $2,500
Which of the following statements is true about bonds? 1) A bond's dollar price is calculated as a growth rate. 2) The dollar price and interest rate of a bond have a positive relationship. 3) Bonds can never default. 4) The dollar price and interest rate of a bond have an inverse relationship. 5) Bonds are ownership shares in a firm.
If the Fed is pursuing a fixed interest rate target, an increase in the money supply will be required when Select one: O a. money demand increases. O b. GDP decreases. c. M2 increases relative to M1, because the transaction cost of transferring money from savings accounts to checking accounts declines. O d. money demand decreases.
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.