Homework Answers
| In Million pesos | |
| Money Supply | 2250 |
| Domestic Credit | 1500 |
| % of Domestic Credit | 66.67% |
| Reserve Ratio/Backing Ratio | 33.33% |
| Increase in Money Supply | 75 |
| Increase in Money Supply in % | 3.33% |
| Total Money Supply | 2325 |
| Domestic Credit | 66.67% of Money Supply |
| Domestic Credit | 1550 |
| Increase in Domestic Credit | 50 |
| Increase in Domestic Credit in % | 3.33% |
| Reserve | 775.00 |
| Reserve ratio/Backing Ratio | 33.33% |
| Increase in Domestic Credit by | 3.33% |
| Increase in reserve by | 3.33% |
| Backing ratio remains same |
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(Table: Mexico's Central Bank Balance Sheet) Suppose output in Mexico rises, causing money demand to change...
Consider this Central Bank balance sheet of a country with a fixed exchange rate. In order...
Consider this Central Bank balance sheet of a country with a
fixed exchange rate. In order to maintain the peg, the bank
intervenes in the foreign exchange market and sells $500 of
foreign bonds for domestic currency.
a) As a result of the intervention, has the domestic money
supply increased or decreased?
b) By how much? (no decimals)
c) What must the Central Bank do to sterilize this
intervention?
A. Buy $500 of foreign assets.
B. Sell $500 of foreign...
Question 3 This question considers long-run policies in Mexico relative to Canada. Assume Mexico's money growth...
Question 3 This question considers long-run policies in Mexico relative to Canada. Assume Mexico's money growth rate is currently 4% and its inflation rate is 2%. Canada's money growth rate is 6% with 3.25% inflation rate. The world real interest rate is 0.75%. For the following questions, use the conditions associated with the general monetary model. Treat Mexico as the home country and define the exchange rate as Mexican pesos per Canadian dollar, E/cS. a. Calculate the growth rate of...
The sum of currency and bank deposits at the central bank is called: a. the money...
The sum of currency and bank deposits at the central bank is called: a. the money supply. b. domestic assets. c. the monetary base. d. fractional reserves. Official intervention in the foreign exchange market to defend a fixed exchange rate when the value of the country's currency is under downward pressure causes a. international reserve holdings to rise. b. a downward pressure on the country's interest rates. c.an increase in the liabilities of the central bank. d. the domestic money...
(Refer to Table 3) Consider the simplified balance sheet for one commercial bank in Table 3....
(Refer to Table 3) Consider the simplified balance sheet for one commercial bank in Table 3. If this commercial bank faces a reserve requirement of 10%, it is clear that Table 3. Bank Atlantic Assets (millions) Liabilities (millions) Reserves $30 Deposits $400 Securities $54 Loans $320
2. Refer to the simplified balance sheet for a bank and answer the following questions. Assets...
2. Refer to the simplified balance sheet for a bank and answer the following questions. Assets Liabilities Reserves $10,000 Deposits $70,000 Loans $66,000 $6,000 Stockholder's equity a. If the required reserve ratio is 5%, how much in excess reserves does this bank hold? Show your work. b. What is the maximum amount this bank can expand on its loans? Show your work. 1 of 3 Unit 9 [MT445] c. What will happen to the M1 money supply if it makes...
17 18 QUESTION 17 Suppose a country's central bank announces that it is decreasing the long-run...
17 18
QUESTION 17 Suppose a country's central bank announces that it is decreasing the long-run money growth rate to tame inflation. The country's currency will suddenly and its rate of depreciation will then O appreciate; rise O depreciate; rise appreciate; fall O depreciate; fall QUESTION 18 A balance of payments crisis is OA a sharp change in interest rates sparked by a change in expectations about the level of exports. ов. a sharp change in foreign reserves sparked by...
IV. Calculations 2 questions 10 points-20 points ) 1. Assume the following simplified balance sheet for...
IV. Calculations 2 questions 10 points-20 points ) 1. Assume the following simplified balance sheet for the Baotou Bank Unit: Billion USS Assets Liabilities. Rate-sensitive assets T Rate-sensitive liabilities Fixed-rate assets Fixed-rate liabilities Using gap analysis, what is the effect of a 1 percent decrease in interest rames? What is the effect of a percent increase in rates? How to deal with the expected to unfavorable interest rate changes? 2. If the required reserve ratio is 10% , currency in...
The table below shows the balance sheet (in millions of dollars) for three banks. a. Suppose...
The table below shows the balance sheet (in millions of dollars) for three banks. a. Suppose the required reserve ratio is 5 percent. Fill in the table. Bank of East Los Angeles Assets Liabilities Deposit: RR: $120 ER: Bank of Alhambra Assets Liabilities RR: Deposit: Bank of Pasadena Assets Liabilities RR: Deposit: ER: ER: b. How much money will be created? c. Now suppose the currency drain ratio is 10%. What is the multiplier? d. How much money would be...
Suppose that Big Bucks Bank has the simplified balance sheet shown below. The reserve ratio is...
Suppose that Big Bucks Bank has the simplified balance sheet
shown below. The reserve ratio is 20 percent.
Instructions: Enter your answers as whole
numbers.
a. What is the maximum amount of new loans that Big Bucks Bank can
make?
Show in columns 1 and 1' how the bank's
balance sheet will appear after the bank has lent this additional
amount.
b. By how much has the supply of money changed?
c. How will the...
The table below is the current balance sheet for the Maple Leafs Bank. Answer the following...
The table below is the current balance sheet for the Maple Leafs
Bank. Answer the following questions assuming that the bank’s
target reserve ratio is 10%.
Suppose that there are a total of 9 other banks in the economy
and that the balance sheet for the whole banking system is
presented in the table below. Assume that each of the other banks
also has a target reserve ratio of 10%.
I need help with the empty boxes in both questions....
Consider this Central Bank balance sheet of a country with a
fixed exchange rate. In order to maintain the peg, the bank
intervenes in the foreign exchange market and sells $500 of
foreign bonds for domestic currency.
a) As a result of the intervention, has the domestic money
supply increased or decreased?
b) By how much? (no decimals)
c) What must the Central Bank do to sterilize this
intervention?
A. Buy $500 of foreign assets.
B. Sell $500 of foreign...
Question 3 This question considers long-run policies in Mexico relative to Canada. Assume Mexico's money growth rate is currently 4% and its inflation rate is 2%. Canada's money growth rate is 6% with 3.25% inflation rate. The world real interest rate is 0.75%. For the following questions, use the conditions associated with the general monetary model. Treat Mexico as the home country and define the exchange rate as Mexican pesos per Canadian dollar, E/cS. a. Calculate the growth rate of...
The sum of currency and bank deposits at the central bank is called: a. the money supply. b. domestic assets. c. the monetary base. d. fractional reserves. Official intervention in the foreign exchange market to defend a fixed exchange rate when the value of the country's currency is under downward pressure causes a. international reserve holdings to rise. b. a downward pressure on the country's interest rates. c.an increase in the liabilities of the central bank. d. the domestic money...
(Refer to Table 3) Consider the simplified balance sheet for one commercial bank in Table 3. If this commercial bank faces a reserve requirement of 10%, it is clear that Table 3. Bank Atlantic Assets (millions) Liabilities (millions) Reserves $30 Deposits $400 Securities $54 Loans $320
2. Refer to the simplified balance sheet for a bank and answer the following questions. Assets Liabilities Reserves $10,000 Deposits $70,000 Loans $66,000 $6,000 Stockholder's equity a. If the required reserve ratio is 5%, how much in excess reserves does this bank hold? Show your work. b. What is the maximum amount this bank can expand on its loans? Show your work. 1 of 3 Unit 9 [MT445] c. What will happen to the M1 money supply if it makes...
17 18
QUESTION 17 Suppose a country's central bank announces that it is decreasing the long-run money growth rate to tame inflation. The country's currency will suddenly and its rate of depreciation will then O appreciate; rise O depreciate; rise appreciate; fall O depreciate; fall QUESTION 18 A balance of payments crisis is OA a sharp change in interest rates sparked by a change in expectations about the level of exports. ов. a sharp change in foreign reserves sparked by...
IV. Calculations 2 questions 10 points-20 points ) 1. Assume the following simplified balance sheet for the Baotou Bank Unit: Billion USS Assets Liabilities. Rate-sensitive assets T Rate-sensitive liabilities Fixed-rate assets Fixed-rate liabilities Using gap analysis, what is the effect of a 1 percent decrease in interest rames? What is the effect of a percent increase in rates? How to deal with the expected to unfavorable interest rate changes? 2. If the required reserve ratio is 10% , currency in...
The table below shows the balance sheet (in millions of dollars) for three banks. a. Suppose the required reserve ratio is 5 percent. Fill in the table. Bank of East Los Angeles Assets Liabilities Deposit: RR: $120 ER: Bank of Alhambra Assets Liabilities RR: Deposit: Bank of Pasadena Assets Liabilities RR: Deposit: ER: ER: b. How much money will be created? c. Now suppose the currency drain ratio is 10%. What is the multiplier? d. How much money would be...
Suppose that Big Bucks Bank has the simplified balance sheet
shown below. The reserve ratio is 20 percent.
Instructions: Enter your answers as whole
numbers.
a. What is the maximum amount of new loans that Big Bucks Bank can
make?
Show in columns 1 and 1' how the bank's
balance sheet will appear after the bank has lent this additional
amount.
b. By how much has the supply of money changed?
c. How will the...
The table below is the current balance sheet for the Maple Leafs
Bank. Answer the following questions assuming that the bank’s
target reserve ratio is 10%.
Suppose that there are a total of 9 other banks in the economy
and that the balance sheet for the whole banking system is
presented in the table below. Assume that each of the other banks
also has a target reserve ratio of 10%.
I need help with the empty boxes in both questions....
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