Which of the following best explains why the demand curve in the market for reserves has a flat section? a. none of the options b. Bank regulations require it c. No bank would borrow at a rate higher than the discount rate

Which of the following best explains why the demand curve in the market for reserves has a flat section? a. none of the options b. Bank regulations require it c. No bank would borrow at a rate higher than the discount rate

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter12: Money, Banking And The Financial System

Section: Chapter Questions

Problem 2WNG

See similar textbooks

Related questions

Q: Assume a banking system with the following balance sheet Assets Liabilities Reserves $400 000…

A: NOTE: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the…

Q: a. Calculate the money supply, the currency deposit ratio, the excess reserve ratio, and the money…

A: Money multiplier is a term in monetary economics that is a phenomenon of creating money in the…

Q: If the Bank of Canada buys a $10 million government bond from a member of the public and the reserve…

A: Given that the Bank of Canada bought a $10 million government bond from a member of the public. rr…

Q: tate in words what the Open Market Trading Desk should do (buy or sell US Treasury bonds) to offset…

A: The money demand curve shows the inverse relationship between the quantity of money demanded and the…

Q: What are demand deposits and why should they be included in the stock of money?

A: Hey, thank you for the question, since there is multiple question posted, according to our policy we…

Q: Suppose that the required reserve ratio is 12.5 percent and you withdraw $65000 from Comerica Bank.…

A: The required reserve ratio represents the percentage of deposits that the bank has to keep with…

Q: Zanadu Federal Bank has reserves of $55 million and checkable deposits of $200 million. The current…

A: Given Information: Banks Reserve: $55 million Checkable deposits: $200 million Required reserve…

Q: Consider TOBITC's Balance Sheet: $3,500 Reserves $30,000 Deposits $2,500 Bonds $40,000 Loans to…

A: Answer - Open Market Operations :- Its the operration under which central banks increase the…

Q: As a result of the central bank’s open-market purchase of bonds, what is the dollar value of the…

A: Open market purchases raise security costs, and open market deals lower security costs. Along these…

Q: Assume a bank has reserves of $21 million and demand deposits of $200 million. Legal Reserve…

A: Answers i) Total checking deposits=$200 million Refer to the given table Required Reserves…

Q: central bank can increase the money supply by: Select one: a. changing the quantities of required…

A: Central bank is an institution that manages currency and monetary policy of a nation.

Q: Ašsümė the following: i. The public holds no currency. ii. The ratio of reserves to deposits (0) is…

A: Money demand can be defined as the amount of money that the domestic residents of a country wants to…

Q: The Federal Reserve makes open market purchases of bonds. What is likely to happen to excess…

A: Open market operations is a monetary policy tool by the central bank. It involves the sales and…

Q: Question 11 In March 2016, the U.S. nonbank public held $1.3 trillion in currency. The checkable…

A: There information about the monetary base of the United States in March 2016 is given.

Q: tärget interest rate is currently 4 percent. the economy is experiencing a sharp rise in inflation,…

A: The Federal Reserve System (FRS), frequently called essentially the Fed, is the national bank of the…

Q: Suppose that the required reserve ratio is 50 percent and you withdraw $425000 from Comerica Bank.…

Q: 1. Use supply-and-demand graphs of the federal funds market in a corridor system to analyze each the…

A: In federal funds market, equilibrium federal funds rate is where demand for reserves equals supply…

Q: Figure 15-2 Interest MS2 MS1 rate, i 4% B 3 A MD Quantity of money (billions of dollars) 900 950 31)…

A: Reserve ratio is the percentage of total bank deposits that depository institutions hold for…

Q: You take $100 you had kept under your mattressand deposit it in your bank account. If this $100stays…

A: Banks keep a certain percentage of deposit as reserves and lends out the rest which increases the…

Q: Thank you for your help!!!!!

A: A.(i) It is given that RRR (Required Reserve Ratio) = 8% and deposits = 200,000; therefore,Excess…

Q: Suppose the reserve requirement is currently 10%. a Assume First Bank has deposits of $90 Million.…

A: The bank is an institution that plays an important role in depositing money from people of the…

Q: You take Rs. 400 you had kept under your mattress and deposit it in your bank account. If this Rs.…

A: In the field of economics, money defined as an asset or a group of assets that individuals in the…

Q: Isabella takes $100 of currency from her wallet anddeposits it into her checking account. If the…

A: The central bank sets a certain minimum percentage of the total deposits to be kept with the…

Q: The reserve requirement is 10%, and Leroy deposits his $1,000 check received as a graduation gift in…

A: Required reserve rate: - Required reserve rate is the ratio of total deposits of commercial banks…

Q: Use a T accounts to illustrate the changes for Bank of Canada and ABC banks If the Bank of Canada…

A: Let us suppose the ABC bank has given balance sheet When the central bank conduct open market buy…

Q: )Let the required reserve ratio be 15%. If the Federal Reserve conducts an open market PURCHASE of…

A: Given in the question is government is purchasing the bonds, which implies that money supply would…

Q: 05. Where was paper money used first? O Egypt Roman Empire Sweden O China O India 06, Given a…

A: Paper money refers to the official currency of a country that is used to purchase goods and…

Q: a. Explain the difference between portfolio and transactions theories of money demand. b. The…

A: Note: Since you have asked more than one question due to Bartleby policy we are restricted from…

Q: The Central Bank Buys $3,000 Worth Of Bonds In The Open Market From JMH Bank. By what amount will…

A: Open Market Operations refers to which the Central bank buys and sells treasury securities on the…

Q: suppose the reserve requirement is 10 percent and the balance sheet of the peoples national bank…

A: Hello, thank you for the question. Since there are multiple sub-part questions asked here, only the…

Q: Suppose the central bank of your country increases reserves by purchasing $1 million worth of bonds…

A: Monetary policy refers to the tool which is used by the central bank in order to increase or…

Q: For this part think about Demand and supply in the market of Reserves. a. Who are on the…

A: While the demand of money involves the desired holding of the assets being financial, the supply of…

Q: llen mean by "reserves were no longer relatively scarce"? ancial crisis, banks chose to hold…

A: The Federal Reserve System is the national bank of the United States. It was established by Congress…

Q: The central bank buys worth of bonds in the open market from Joe, who deposits the proceeds in his…

A: Suppose the central bank buys $10,000 worth of bonds. The required reserve ratio is 5% Central bank:…

Q: Use a T accounts to illustrate the changes for Bank of Canada and ABC banks If the Bank of Canada…

A: Let us suppose the ABC bank has given balance sheet When the central bank conduct open market buy…

Q: The Fed buys $100 million of bonds from the publicand also lowers the required reserve ratio. What…

A: Monetary policy is implemented by the monetary authorities in order to control and regulate the…

Q: Suppose that banks hold $20 billion in total reserves and the public holds $5 billion in cash.…

A: Since the question you have posted consists of multiple parts, we will answer the first three…

Q: of Tazi is controlled by the country's central bank known as the Bank of Tazi. The zian dollar.…

A: *Answer: Required Reserves = 300million Excess Reserves = 75 million Deposits = 7,500 million In…

Q: What are demand deposits and why should they be included in the stock of money?

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which of the following is NOT a policy tool of the Central Bank? * a. open market operations b. the…

A: A national bank, central bank, or money related authority is a foundation that deals with the cash…

Q: When the central bank of Guilder sells bonds, which of the following will occur?

A: Bonds are loans that are paid off in the future and accumulate interest.

Q: In a system of fractional-reserve banking, evenwithout any action by the central bank, the…

A: Fractional reserve banking refers to holding a prescribed fraction or ratio of the total holding of…

Q: Suppose banks have a 10% reserve requirement and hold no excess reserves. Banks have $1750 in…

A: Given: Reserve Requirement = 10% Reserves in bank = $1750 Currency in circulation = $750 Let total…

Q: Using the supply and demand analysis of the marketfor reserves, indicate how the following…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: If the required reserve ratio is 0.2, and a bank has $100 million in demand deposits and $40 million…

A: A reserve fund is a savings account or other highly liquid asset set aside by an individual or…

Q: If rr = 25% and you withdraw $100, what happens to A the bank has zero excess reserves b. $50 in…

A: Financial institutions must maintain a certain amount of bank reserves to meet central bank…

Q: 1. Which of the following would NOT cause a rise in the money supply (assume ceteris paribus)? A. An…

A: Money supply:- It is basically the policy created by the monetary authority of a country (like the…

Q: The central bank buys $10,000 worth of bonds in the open market from Elaine, who deposits the…

A: Central bank: It means an apex financial institution of the country. Liabilities are the deposit…

Q: a. Calculate the dollar value of the reserves that the Bank of Uchenna is required to hold. b. Given…

A: “Since you have posted a question with multiple sub-parts, we will solve the first three subparts…

Q: Assume that a bank has on its asset side reserves of 1000 and loans of 6000 and on itsliability side…

A: Following are the values. Reserves = 1000 Loan = 6000 Deposits = 7000 Required reserve ratio = 10%

Question

Which of the following best explains why the demand curve in the market for reserves has a flat section?

a. none of the options

b. Bank regulations require it

c. No bank would borrow at a rate higher than the discount rate

d. No bank will lend reserves below the rate it earns on funds deposited at teh Fed

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Humongous Bank is the only bank in the economy. The people in this economy have 20 million in money, and they deposit all their money in Humongous Bank. Humongous Bank decides on a policy of holding 100 reserves. Draw a T-account for the bank. Humongous Bank is required to hold 5 of its existing 20 million as reserves, and to loan out the rest. Draw a T-account for the bank after it has made its first round of loans. Assume that Humongous bank is part of a multibank system. How much will money supply increase with that original 19 million loan?
1. You deposit $100 of currency into your account. Explain what happens to reserves , checkabledeposits, and monetary base? 2. Explain what the shadow banking system is and how it works. 3. Your bank has the following balance sheet:Assets LiabilitiesReserves $70 million Checkable deposits $200 millionSecurities $50 millionLoans $130 million Bank capital $50 millionIf the required reserve ratio is 10%, what actions should the bank manager take if there is anunexpected deposit outflow of $50 million? Explain your answer. 4. Explain and demonstrate graphically that if the central bank pursues targeting a monetaryaggregate, it is likely to lose control over the interest rate. 5. In the market for reserves, the federal funds rate is equal to the interest rate paid on excessreserves. Explain and demonstrate graphically the effect of an open market sale on the federalfunds rate.
The government of a small country imposes a minimum reserve ratio of 7%. If a bank within this country receives a deposit of $130,000, then: Select one: a. $9,100 should be lent out to customers and $120,900 should be held by the bank b. $120,900 should be lent out to customers and $9,100 should be held by the bank c. None of the answers are correct d. $130,000 should be fully lent to customers at 7% $130,000 should be fully lent to customers at 7% $130,000 should be fully lent to customers at 7% e. $130,000 should be held by the bank
What are demand deposits and why should they beincluded in the stock of money?
Celine, another manager at a different branch of MillerBank in a different region of the country, faces a reserve requirement of 10%. She has excess reserves 0f $1000. What’s the maximum amount that she could increase the money supply? a.500 dollars b.1000 dollars c.10000 dollars d.100 dollars e.2000 dollars
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 32Deposits 205Loans 150 Securities 53Other $X Using the balance sheet above, find the level of required reserves for this bank if the required reserve ratio = 8%(Give answers to 2 decimal places as needed)
Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 44Deposits 255Loans 155 Securities 51Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 6%(Give answers to 2 decimal places as needed)
What are the benefits and costs for a bank when itdecides to increase the amount of its bank capital?
he banking system has $8,000 in reserve, $72,000 in loans, and $80,000 in deposits. Currently the reserve requirement is 10%. a. If the Fed lowers reserve requirement to 5%, the banking system converts all excess reserves to loans, but borrowers return only 50% of these funds to the banking system as deposits. What is the maximum amount of loans the banking system could make
Humongous Bank is the only bank in the economy.The people in this economy have $20 million in money,and they deposit all their money in Humongous Bank.a. Humongous Bank decides on a policy of holding100% reserves. Draw a T-account for the bank.b. Humongous Bank is required to hold 5% of itsexisting $20 million as reserves, and to loan outthe rest. Draw a T-account for the bank after ithas made its first round of loans.c. Assume that Humongous bank is part of amultibank system. How much will money supplyincrease with that original $19 million loan?
The bank you own has the following balance sheet Assets OA. You can go to the discount window. OB. You can call in or sell off loans. OC. You can borrow reserves in the federal funds market OD. Any of the above are appropriate actions to take Liabilities $75 million Reserves Loans Deposits Bank capital $525 million If the bank suffers a deposit outflow of $50 million with a required reserve ratio on deposits of 10%, what actions can you take to keep your bank from failing? $500 million $100 million
What does it mean when a commercial bank has "excess reserves"? Select one: a. It is making above-normal profits on its loans to customers. b. Its actual reserves are less than its target reserves. c. It is in a position to make additional loans. d. Its reserves exceed its loans. e. Its loans to customers exceeds its target reserves..