If the reserve ratio is 100-percent, then a new deposit of $500 into a bank account...
If the reserve ratio is 100-percent, then a new deposit of $500 into a bank account
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eventually increases the money supply by $500 |
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leaves the size of the money supply unchanged |
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eventually decreases the size of the money supply by $500. |
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None of the above is correct. |
Homework Answers
The correct option is B leaves the size of the money supply unchanged
Mathematically, the monetary multiplier would be 1/RR = 1/1 = 1, so the amount of new money would be $500 × MM – $500 = $500 × 1 – $500 = $0
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If the reserve ratio is 100-percent, then a new deposit of $500
into a bank account...
1.If you deposit $100 in a bank account and the reserve ratio is 20 percent. a.What...
1.If you deposit $100 in a bank account and the reserve ratio is 20 percent. a.What is the minimum amount of money banks will be required to keep in reserves? How much loans can banks make at most? What is the money multiplier? How much money can be created from $100 of reserves? b.If the fed raises the required reserve ratio to 30 percent. What is the minimum amount of money banks will be required to keep in reserves? How...
Which statement best describes the outcomes of a decrease in reserve requirements? The reserve ratio increases,...
Which statement best describes the outcomes of a decrease in reserve requirements? The reserve ratio increases, the money multiplier decreases, and the money supply decreases. The reserve ratio decreases, the money multiplier decreases, and the money supply decreases. The reserve ratio decreases, the money multiplier increases, and the money supply increases. The reserve ratio increases, the money multiplier increases, and the money supply increases. Question 16 (1 point) Suppose the reserve ratio is 10 percent and banks do not hold...
If a bank uses $80 of reserves to make a new loan when the reserve ratio...
If a bank uses $80 of reserves to make a new loan when the reserve ratio is 25 percent, a. the money supply initially decreases by $80. b. the money supply initially increases by $20. c. the money supply will eventually increase by more than $20 but less than $80. d. the level of wealth in the economy will not change.
d. $200 reserve ratio is 5 percent and the bank has $1,000 in deposits. Its reserves...
d. $200 reserve ratio is 5 percent and the bank has $1,000 in deposits. Its reserves amount to S5. S50. c. $95. d. $950 Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10 percent. If you deposit $9,000 into First Jayhawk Bank, a. First Jayhawk's required reserves increase by $900. b. First Jayhawk will be able to lend out $8,100 c. First Jayhawk's assets and liabilities both will increase by...
The Reserve Bank of Australia (RBA) purchases government bonds from an Australian bank. This transaction the...
The Reserve Bank of Australia (RBA) purchases government bonds from an Australian bank. This transaction the monetary base and __ the money supply. (a) increases; increases (b) decreases; decreases decreases; leaves unchanged (d) increases; leaves unchanged (c)
1) Suppose that you deposit $2,000 in your bank and the required reserve ratio is 10...
1) Suppose that you deposit $2,000 in your bank and the required reserve ratio is 10 percent. The maximum loan your bank can made as a direct result of your deposit is Answer: $1,800 2) If the reserve requirement ratio (RR) is 0.20, the simple deposit multiplier is Answer: 5 3) Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 20 percent. If the Federal Reserve reduces the required...
If the reserve ratio is 10 percent and a bank receives a new deposit of $10,...
If the reserve ratio is 10 percent and a bank receives a new deposit of $10, this bank a. must increase required reserves by $1. b. will initially see its total reserves increase by $1. c. will be able to make new loans up to a maximum of $1. d. All of the above are true.
Suppose the reserve ratio is 5 percent, banks do not hold excess reserves, people do not...
Suppose the reserve ratio is 5 percent, banks do not hold excess reserves, people do not hold currency, and the Bank of Canada purchases $20 million of government bonds. Which statement best describes the effects of Bank of Canada's purchase? O a Bank reserves increase by $20 million, and the money supply eventually decreases by $400 million Ob Bank reserves decrease by $20 million, and the money supply eventually increases by $400 million O Bank reserves decrease by $20 million,...
If a bank uses $80 of reserves to make a new loan when the reserve ratio is 25% A) Money supply initially decreases by $...
If a bank uses $80 of reserves to make a new loan when the reserve ratio is 25% A) Money supply initially decreases by $80 B) Money supply initially increases by $20 C) Money supply will eventually increase by more than $20 but less than $80 D) Level of wealth in economy will not change
3. If you deposit $400 in a bank account and the reserve ratio is 20 percent....
3. If you deposit $400 in a bank account and the reserve ratio is 20 percent. a. What is the minimum amount of money banks will be required to keep in reserves? How much loans can banks make at most? What is the money multiplier? How much money can be created from $400 of reserves? b. If the fed raises the required reserve ratio to 30 percent. What is the minimum amount of money banks will be required to keep...
Which statement best describes the outcomes of a decrease in reserve requirements? The reserve ratio increases, the money multiplier decreases, and the money supply decreases. The reserve ratio decreases, the money multiplier decreases, and the money supply decreases. The reserve ratio decreases, the money multiplier increases, and the money supply increases. The reserve ratio increases, the money multiplier increases, and the money supply increases. Question 16 (1 point) Suppose the reserve ratio is 10 percent and banks do not hold...
d. $200 reserve ratio is 5 percent and the bank has $1,000 in deposits. Its reserves amount to S5. S50. c. $95. d. $950 Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10 percent. If you deposit $9,000 into First Jayhawk Bank, a. First Jayhawk's required reserves increase by $900. b. First Jayhawk will be able to lend out $8,100 c. First Jayhawk's assets and liabilities both will increase by...
The Reserve Bank of Australia (RBA) purchases government bonds from an Australian bank. This transaction the monetary base and __ the money supply. (a) increases; increases (b) decreases; decreases decreases; leaves unchanged (d) increases; leaves unchanged (c)
Suppose the reserve ratio is 5 percent, banks do not hold excess reserves, people do not hold currency, and the Bank of Canada purchases $20 million of government bonds. Which statement best describes the effects of Bank of Canada's purchase? O a Bank reserves increase by $20 million, and the money supply eventually decreases by $400 million Ob Bank reserves decrease by $20 million, and the money supply eventually increases by $400 million O Bank reserves decrease by $20 million,...
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