If the reserve requirement is 100%, and banks keep no excess reserves, a new deposit of $1,000 into the banking system will allow banks to create:
No new money
$100 of new money
$1,000 of new money
$10,000 of new money
If the reserve requirement is 100%, and banks keep no excess reserves, a new deposit of...
Assume that banks do not hold excess reserves. Banking system has $50 million in reserves and a reserve requirement of 10%. Public holds 20 million in currency . Then the public decides to withdraw $5 million in currency from the banking system. If the banking system wants to keep money supply stable by changing the reserve requirement. What will the new reserve requirement be? A)8.1% B)9.1% C)9.7% D) 10%
The Federal Reserve specifies a percentage of checkable deposits that banks hold must hold as reserves (required reserves), which is called the required reserve ratio. Excess reserves are reserves that banks hold over and above the required reserves and can make loans. Suppose that Bank A has an increase in checkable deposits of $100 million and the required reserve is 10%. How much money can Bank A create by making loans? How much money can the banking system as a...
8. The reserve requirement, open market operations, and the moneysupply Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $100. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) 15 Money Supply (Dollars) Simple Money Multiplier 10 A lower reserve requirement is...
Assume that there are no excess reserves in the banking system when the reserve requirement 20% The purchase of $10.000 in U.S government securities by the Fed from Academy National Bank has the potential to ultimately increase the money supply by a- 2,000 b-8,000 c-10,000 d-20,000 e- 50,000
If banks faced a 100 percent reserve requirement, a decrease in banking reserves of $4 million would:A. increase the money supply by $4 million.B. increase the money supply by $400 million.C. decrease the money supply by $4 million.D. decrease the money supply by $400 million.E do none of the above.
ommercial Bank has $5,000 in excess reserves, $90,000 in checkable deposit and the reserve ratio is 30 percent. The bank must have: A. $35,000 in reserves. B. $32,000 in reserves. C. $10,000 in reserves. D. 15,000 in reserves 23. Suppose a commercial bank has checkable deposits of $100,000 and the legal reserve ratio is A. are $17,000. 10 percent. If this bank has $ 17,000 in reserves, then its excess reserves: B. are $10,000. C. are $7,000. D. are $1,700...
61 Suppose the required reserve ratio is 40% and all banks do not hold excess reserves. I Michael deposits S2000 cash in his current account (1) the money supply MI will immediately decrease by $2.000 (2) the maximum increase in bank deposits will be SS 000 (3) the maximum increase in bank loans will be 52 000 A. (1) only B. (2) only c. (1) and (2) only D. (1), (2) and (3) 11 the ability of deposit creation of...
Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $400. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. A higher reserve requirement is associated with a _______ money supply. Suppose the Federal Reserve wants to increase the money supply by $200. Again, you can assume that...
8. The reserve requirement, open market operations, and the money supply Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $500. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) Money Supply (Dollars) Simple Money Multiplier A lower reserve requirement is associated...
7. The reserve requirement, open market operations, and the moneysupply Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $400. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) Money Supply (Dollars) Simple Money Multiplier A higher reserve requirement is associated with...