The table below is the balance sheet for all the banks combined in the banking system. Reserves Loans Assets Securities Fixed assets Total $ 110,000 990,000 66,000 44,000 $1,210,000 Liabilities/Equity Demand deposits Shareholders' equity Total a. Which one of the above figures is part of the money supply? $ 1,100,000 110,000 $1,210,000 Demand deposits worth $1,100,000 are included in money supply. b. If all banks maintain 100% reserves, what happens to the money supply if $460 cash is deposited into one of the banks in the system? Money supply would not change V c. If none of the banks maintain reserves, what happens to the money supply if $460 cash is deposited into one of the banks in the system? Money supply would increase without limit
The table below is the balance sheet for all the banks combined in the banking system. Reserves Loans Assets Securities Fixed assets Total $ 110,000 990,000 66,000 44,000 $1,210,000 Liabilities/Equity Demand deposits Shareholders' equity Total a. Which one of the above figures is part of the money supply? $ 1,100,000 110,000 $1,210,000 Demand deposits worth $1,100,000 are included in money supply. b. If all banks maintain 100% reserves, what happens to the money supply if $460 cash is deposited into one of the banks in the system? Money supply would not change V c. If none of the banks maintain reserves, what happens to the money supply if $460 cash is deposited into one of the banks in the system? Money supply would increase without limit
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The table below is the balance sheet for all the banks combined in the banking system.
a Sag
Reserves
Loans
Assets
Securities
Fixed assets
Total
$110,000
990,000
66,000
44,000
$1,210,000
Liabilities/Equity
Demand deposits
Shareholders' equity
Total
a. Which one of the above figures is part of the money supply?
$1,100,000
110,000
$1,210,000
Demand deposits
worth $ 1,100,000 are included in money supply.
b. If all banks maintain 100% reserves, what happens to the money supply if $460 cash is deposited into one of the banks in the
system?
44
Money supply would not change V
c. If none of the banks maintain reserves, what happens to the money su
system?
Money supply would increase without limit
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