EBK ESSENTIALS OF ECONOMICS
7th Edition
ISBN: 8220102452107
Author: Mankiw
Publisher: CENGAGE L
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Chapter 21, Problem 2QCMC
To determine
The impact of money deposit in the bank and the reserves.
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Which of the following activities will affect a bank’s required reserves? why?
a. The local Girl Scout troop collects coins and currency to buy a new camping stove. The troop deposits $250 in coins and opens a small-time deposit.
b. You decide to move $200 from your MMDA to your NOW account.
c. You sell your car to the teller at your bank for $5,000. The teller pays with a check drawn on the bank, and you deposit the check immediately into your checking account at the bank
Suppose the reserve requirement is currently 10%.
a Assume First Bank has deposits of $90 Million. Calculate the reserves for First Bank.
$_______________ million.
b. At the end of the day, First bank has $8 million of reserves. Will be a borrower or lender in the federal funds market?
First bank will __________________ reserves of $____________ million in the federal funds market.
1. The demand curve for money will shift to the right because of a:A) fall in the interest rate.B) rise in real GDP.C) rise in the interest rateD) fall in real GDP.
2. The money demand curve is _________ because a lower interest rate ___________.A) upward-sloping; increases the opportunity cost of holding moneyB) downward-sloping; increases the opportunity cost of holding moneyC) upward-sloping; decreases the opportunity cost of holding moneyD) downward-sloping; decreases the opportunity cost of holding money
3. Suppose a bank has excess reserves of P800 and the reserve ratio is 10%. If Diana deposits P1,500 of cash into her checking account and the bank lends P600 to Russell, that bank can lend an additional:A) P1,550 B) P1,300 C) P2,000 D) P1,350
4. To increase the money supply, the central bank could:A) lower the discount rate.B) make open-market purchases.C) lower reserve requirements.D) lower the discount rate, make open-market purchases, or lower reserve requirements.
5. A…
Chapter 21 Solutions
EBK ESSENTIALS OF ECONOMICS
Ch. 21.1 - Prob. 1QQCh. 21.2 - Prob. 2QQCh. 21.4 - Prob. 4QQCh. 21 - Prob. 1QRCh. 21 - Prob. 2QRCh. 21 - Prob. 3QRCh. 21 - Prob. 4QRCh. 21 - Prob. 5QRCh. 21 - Prob. 6QRCh. 21 - Prob. 7QR
Ch. 21 - Prob. 8QRCh. 21 - Prob. 9QRCh. 21 - Prob. 10QRCh. 21 - Prob. 1QCMCCh. 21 - Prob. 2QCMCCh. 21 - Prob. 3QCMCCh. 21 - Prob. 4QCMCCh. 21 - Prob. 5QCMCCh. 21 - Prob. 6QCMCCh. 21 - Prob. 1PACh. 21 - Prob. 2PACh. 21 - Prob. 3PACh. 21 - Prob. 4PACh. 21 - Prob. 5PACh. 21 - Prob. 6PACh. 21 - Prob. 7PACh. 21 - Prob. 8PACh. 21 - Prob. 9PACh. 21 - Prob. 10PACh. 21 - Prob. 11PA
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