Why would a bank prefer making loans by borrowing funds in the fed fundsmarket?Select one:O A. The fed funds rate is less than the interest rate on reserve balancesOB. The fed funds market is less regulated than bank reservesO C. Banks need to maintain reserves above the Fed's required reserve ratioO D. Each of these answers is correctWhich of the following is (1) calculated with information provided by the Bureau ofEconomic Analysis, (2) tracks domestic spending on durable goods, non-durablegoods, and services, and (3) factors in recent price changes before comparing toan index base?O a. The Consumer Price Index (CPI)O b. The Producer Price Index (PPI)O c. The Personal Consumption Expenditures Price Index (PCEPI)O d. The International Standards Price Index (ISPI)

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Why would a bank prefer making loans by borrowing funds in the fed funds market? Select one: OA. The fed funds rate is less than the interest rate on reserve balances B. The fed funds market is less regulated than bank reserves C. Banks need to maintain reserves above the Fed's required reserve ratio O D. Each of these answers is correct

Why would a bank prefer making loans by borrowing funds in the fed funds market? Select one: OA. The fed funds rate is less than the interest rate on reserve balances B. The fed funds market is less regulated than bank reserves C. Banks need to maintain reserves above the Fed's required reserve ratio O D. Each of these answers is correct

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Northern Bank: Balance Sheet Assets Liabilities Deposits Capital $7,000 $1,000 $8,000 Reserves $420 $7,580 $8.000 Loans Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio, Northern Bank must and O A. increase its reserves by $140; decrease its deposits by $140 O B. increase its reserves by $280; increase its loans by $380 OC. increase its reserves by $280; decrease its deposits by $280 O D. increase its reserves by $140; decrease its loans by $140 O E. not change its reserves; not change its deposits
Economi 15. The federal deposit insurance corporation (FDIC) insures individual bank accounts up to $250,000 per account. Which of the following statements regarding FDIC insurance is true? FDIC insurance a. does not eliminate the need for reserve requirements because bank runs can't be eliminated in a fractional reserve banking system b. has prevented bank runs because the FDIC pays depositors interest at the discount rate on their accounts c. eliminates the need for reserve requirements because banks are not liable for any depositor losses d. works in coordination with reserve requirements to ensure depositor confidence, preventing bank runs.
When the reserve requirement changes, which of the following will change for an individual bank? Multiple Choice a.) transactions account balances and lending capacity b.) required reserves, excess reserves, and lending capacity c.) transactions account balances, total reserves, and excess reserves d.) total reserves, required reserves, and excess reserves
Assuming that the reserve ratio is 10%, what amount of excess reserves are held by with the bank balance sheet listed below? Assets Liabilities & Net Worth Reserves $280,000 Checking deposits $2,800,000 Loans Outstanding $2,920,000 Total $3,200,000 Net Worth Stockholders' Equity $400,000 Total $3,200,000 a. $240,000 b. zero c. $320,000 d. $280,000
You are given the following T-account for PNC Bank. Reserves are $20,000, Loans are $15,000, and Demand Deposits are $35,000. The FED has set the required reserve ratio of 25%. Use previous information to solve for excess reserves? $0 $3,750 $11,250 O $17,500
The State Bank of Oswald has cash reserves of $5,000, loans of $495,000, and deposits of $500,000. The bank maintains a reserve requirement of 1 percent. Calculate (show work) this bank’s excess reserves and write the answer below.
11 1 point Table 30-4 Reserves Loans Bank of Socorro Assets Liabilities $4,800 Deposits 75,200 $80,000 Refer to Table 30-4. Assume the Fed's reserve requirement is 4 percent and all banks besides the Bank of Socorro are exactly in compliance with the 4 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Socorro decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase? $40,756.98 $40,000.00 $26,666.67 $42,930.49
A bank has a 5 percent reserve requirement, $4,000 in deposits, and has loaned out all it can given the reserve requirement. Select one: a.None of them. b.lt has $1,000 in reserves and $3,000 in loans. c.lt has $20 in reserves and $4,980 in loans. d.It has $200 in reserves and $4,800 in loans.
Suppose that Kesha deposits $7,000 into her savings account at First Bank. The reserve requirement facing First Bank is 9%. Instructions: Enter your answer as a whole number, If you are entering a negative number include a minus sign. a. Use this information to show how First Bank's assets and liabilities Initially change when Kesha deposits the $7000 in the bank. A Simple Bank Balance Sheet Assets Liabilities Change in Reserves: $ Change in Deposits: $ b. How much money can First Bank lend out to other people? c. Now suppose that First Bank holds no excess reserves and lends out all of the excess reserves resulting from Kesha's deposit. How do First Bank's assets and labilities change? A Simple Bank Balance Sheet Assets Liabilities Change in Reservesi Change in Loans
A commercial bank has checkable-deposit liabilities of $500,000, reserves of $150,000, and a required reserve ratio of 20 percent. The amount by which a single commercial bank and the amount by which the banking system can increase loans are respectively: Select one: a. $30,000 and $150,000 b. $50,000 and $250,000 c. $50,000 and $500,000 d. $100,000 and $500,000
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.
Question 3 Total reserves in the banking system are the sum of which of the following? O Required reserves and excess reserves. O Required reserves and Treasury Securities held by banks. O Required reserves and customer checking accounts. O Required reserves and customer savings accounts.