What is the role of banks as financialintermediaries? a) Savers go directly tothe banks for funds. b) Banks issue bondsto finance their daily operations. c)Borrowers go directly to savers for funds.d) Savers deposit their funds into banks;banks extend loans to borrowers. e)Borrowers deposit their funds into banks;banks extend loans to savers.What is the role of banks as financial intermediaries?a) Savers go directly to the banks for funds.b) Banks issue bonds to finance their daily operations.c) Borrowers go directly to savers for funds.d) Savers deposit their funds into banks; banks extend loans to borrowers.e) Borrowers deposit their funds into banks; banks extend loans to savers..

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The author of your textbook defines a bank’s leverage ratio as the value of its assets divided by its capital (or owner’s equity). Explain how a bank with a high leverage ratio runs the risk of a bank run when the market value of the securities it owns falls in value. (Use numbers in your explanation.) Explain how increases in the real interest rate affect the quantity of real money balanced demanded. (Graphically illustrate) Explain how increases in real income affect the demand for real money balances. (Graphically illustrate.)
If the value of a bank's loan declines, what is the corresponding reduction on the other side of its balance sheet? Equity is reduced by the amount of the decline in the value of the loan. Borrowing from other banks are reduced by the amount of the decline in the value of the loan. Deposits are reduced by the amount of the decline in the value of the loan. Cash is reduced by the amount of the decline in the value of the loan.
suppose the required reserve ratio is 11%. How much additional money can BBB lend out at a maximum? suppose the required reserve ratio is lowered to 8%. What is the Maximum amount of additional money that BBB can lend out? Is this different than the maximum amount of new money BBB can create by itself? 3. suppose the required reserve ratio is raised to 15%. What is the maximum amount of additional money BBB can lend out?
Banks don't lend out all of the funds deposited because: A) they need to make more money on interest-bearing deposits. B) they need to reduce their liquidity position. C) it would not be profitable. D) they have to satisfy any depositor who wants to withdraw funds.
Subtracting the value of a bank's liabilities from the value of its assets leaves its A. deposits. B. capital. C. net income. D. gross income.
Which of the following is a reason that we do not hold all of our money in cash? Select one: a. To increase transaction costs b. To protect our ability to purchase goods spontaniously. C. To earn interest, d. To reduce transaction costs.
Complete the sentences with the correct function of money. Norah walks into her favorite department store, Bullseye, to pick out a new dress. She checks out the price tag and is excited to see that the dress is on sale and is now relatively cheaper than another dress she was considering. Here, money is serving as aShe is especially excited because she has been saving money each week in her piggy bank at home so that she can afford a trip to Florida next summer. Here, money is serving as aShe quickly walks to the checkout line where she pays the cashier for her new dress. Here, money is serving as a Answer bank in images
Summarize the Before Collapse of Silicon Valley Bank, the Fed Spotted Big Problems article from the New York Times. Descriptive (no more than one-half page in length). Provide a summary of the article you analyze. (What is the major idea or theme the author is describing, developing, or attempting to put forth? In what ways does the author expand on his/her major idea or theme? What conclusions does the author reach?) What I'm looking for here is a "bird's-eye view." NO QUOTES; NO DATA or STATISTICS.
If the reserve requirement is 5 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $10, then this bank A. must increase its required reserves by $10. B. will initially see its total reserves increase by $10.50. C. will be able to make new loans up to a maximum of $9.50. D. All of the above are correct.
When a bank makes a loan what happens to the amount of money in deposits it holds and to the quantity of money in the economy? A. Bank deposits decrease, the quantity of money increases. B. Bank deposits do not change, the quantity of money does not change. C. Bank deposits decrease, the quantity of money does not change. D. Bank deposits do not change, the quantity of money increases. Submit
Exercise #1: Write two paragraphs on the impact of borrower liquidity (think, cash like assets and income) vs. equity (think, property value). These issues can be measured at loan origination, and also can and do change over the life of the loan. They are effected by macro-economic factors, like the local or general health of the economy and by personal factors like death, divorce, lost of employment, and over spending/poor financial management.

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