1)c) sell government securities
2) c) the price level will fall and the level of output will be unaffected.
3)b) $5000
Required reserves = 0.1*50000= 5000
Loans= 50000-5000= 45000
Additional loans= 45000-40000= 5000
To decrease the money supply, the Bank of Canada could O a) lower the bank rate....
14. a. If the Bank of Canada wanted to decrease the money supply, the Bank would buys bonds from the Chartered Banks. (Primary dealers) b. decreases the fixed operating band for overnight lending. decreases the bank rate. d. sells government securities to the Chartered Banks. (Primary dealers) provides more loans to the Chartered Banks through the Standing Liquidity Facility. c. e. 15. The Bank of Canada purchases $5 million worth of government securities (government bonds) from the Chartered Banks. The...
Back to Aset Attempts: Average: 2 2. The Bank of Canada and the money supply Suppose the money supply (as measured by chequable deposits) is currently $900 billion. The required reserve ratio is 30%. Banks hold $270 billion in reserves, so there are no excess reserves. The Bank of Canada wants to increase the money supply by $10 billion, to $910 billion. It could do this through open-market operations or by changing the required reserve ratio. Assume for this question...
If the Fed wished to decrease the money supply, it could A. lower the required reserve ratio. B. lower the interest rate on term deposits. C. lower the interest rate on reverse repurchase agreements. D. raise the interest rate it pays on reserves.
We are given the following information about the assets and liabilities of a bank: a. The Fed sets a reserve requirement of 3% on deposits between $16 million and $122 million. If the bank holds $5 million dollars in US Treasury Securities and $2 million in excess reserves, compute the bank’s required reserve level and the quantity of loans this bank is able to make to the public. b. What is the value of the money multiplier? [Money Multiplier =...
Suppose an economy has $200,000 of demand deposits and $40,000 of excess reserves, with a 10% required reserve ratio. If the monetary authorities lower the required reserve ratio to 2%: A. the excess reserves will fall by 10%. B. the excess reserves will rise. C. excess reserves will decrease by $20,000. D. there will be no more excess reserves in the system.
The initial money market supply and demand in an economy is given by: Money supply: Ms = $100,000 Money demand: MD 600,000 – 4,000,000r = The following table shows the changes in deposits, reserves and loans of five banks following a $40,000 initial deposit in Best Bank, after the Fed made an open market operation purchase of securities from Best Bank. Only the five biggest banks are shown here, but there are many other banks in the economy. Assume that...
10. Suppose the reserve ratio is 25%. Bank One has $12,000 deposits and $3,000 bank capital (owners' equity). Bank One has $3,000 securities. What are the reserves and loans? a. Draw the bank balance sheet with reserves, deposits, loans, securities and capital. b. What is the total amount of reserves? c. What is the total amount of loans? d. What is the leverage ratio? e. If $500 are deposited, how much money would be created with a reserve ratio of...
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...
9 In the U.S econormy the money supply is cot A) U.S Treasury. B) Federal Reserve System D) Senate Committee on Banking and Finance. 10. Ceteris paribus, if the Fed raised the required reserve ratio A) Banks could increase their lending B) The Federal funds interest rate would rise. The size of the monetary multiplier would decrease. D) The size of the monetary multiplier would increase. 11. Money is created when A) Loans are made. Checks written on one bank...
Saved Question 20 (1 point) What is a bank run? O A) A situation where a commercial bank is holding zero reserves. B) A panic situation where many depositors rush simultaneously to withdraw their deposit money in the form of cash. OC) A situation where all commercial banks in the system are simultaneously short of reserves. O D) The collapse of a non-commercial bank as a result of non-payment of loans. E) The collapse of a commercial banks as a...