The table below is the balance sheet for all the banks combined in the banking system. Assets Liabilities/Equity Demand deposits Shareholders' equity Reserves $12,500 $ 125,000 Loans 112,500 12,500 Securities 7,500 Fixed assets 5,000 Total $137,500 Total $137,500 a. Which one of the above figures is part of the money supply? Demand deposits v worth $ 125000 are included in money supply. b. If all banks maintain 100% reserves, what happens to the money supply if $300 cash is deposited into one of the banks in the system? Money supply would (Click to select) v c. If none of the banks maintain reserves, what happens to the money supply if $300 cash is deposited into one of the banks in the system? Money supply would (Click to select)

Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Monetary System
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The table below is the balance sheet for all the banks combined in the banking system.
Assets
Liabilities/Equity
Demand deposits
Shareholders' equity
Reserves
$ 12,500
112,500
$ 125,000
Loans
12,500
Securities
7,500
Fixed assets
5,000
Total
$137,500
Total
$137,500
a. Which one of the above figures is part of the money supply?
Demand deposits
v worth $
125000 are included in money supply.
b. If all banks maintain 100% reserves, what happens to the money supply if $300 cash is deposited into one of the banks in the
system?
Money supply would (Click to select) v
C. If none of the banks maintain reserves, what happens to the money supply if $300 cash is deposited into one of the banks in the
system?
Money supply would (Click to select)
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Transcribed Image Text:The table below is the balance sheet for all the banks combined in the banking system. Assets Liabilities/Equity Demand deposits Shareholders' equity Reserves $ 12,500 112,500 $ 125,000 Loans 12,500 Securities 7,500 Fixed assets 5,000 Total $137,500 Total $137,500 a. Which one of the above figures is part of the money supply? Demand deposits v worth $ 125000 are included in money supply. b. If all banks maintain 100% reserves, what happens to the money supply if $300 cash is deposited into one of the banks in the system? Money supply would (Click to select) v C. If none of the banks maintain reserves, what happens to the money supply if $300 cash is deposited into one of the banks in the system? Money supply would (Click to select) < Prev 7 of 7 Next
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