Suppose that in a country people gain more confidence in the banking system and so hold...
Suppose that in a country people gain more confidence in the banking system and so hold relatively less currency and more deposits. As a result, bank reserves will
Group of answer choices
increase and the money supply will eventually increase.
increase and the money supply will eventually decrease.
decrease and the money supply will eventually decrease
decrease and the money supply will eventually increase.
Homework Answers
If in a country people gain more confidence in banking system and so hold relatively less currency and more deposits. As a result bank reserves will increase and money supply will eventually increase. The increase in the bank reserves will help bank make more loans to consumers and businesses which will in turn increase the money supply in the economy.
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Suppose that in a country people gain more confidence in the
banking system and so hold...
Question 5 2 pts Year 2012 2013 2014 Adult Population 2,000 3,000 3,200 Number of Employed...
Question 5 2 pts Year 2012 2013 2014 Adult Population 2,000 3,000 3,200 Number of Employed 1,400 1,300 1,600 200 600 200 Number of Unemployed The number of adults not in the labor force of Aridia in 2012 was O 400 O 1,800 O 200 600 Question 6 The regional Federal Reserve Banks O are not allowed to make loans to banks in their region. O regulate banks in their regions. o have more voting members on the FOMC than...
If the public decides to hold less currency and more deposits in banks, bank reserves a)...
If the public decides to hold less currency and more deposits in banks, bank reserves a) increase and the money supply eventually increases. b) increase but the money supply does not change. c) decrease but the money supply does not change. d) decrease and the money supply eventually decreases.
3) In a country A, the monetary base is $1,000. People hold one third of their...
3) In a country A, the monetary base is $1,000. People hold one third of their money in the form of currency and thus two-thirds as bank deposits. Banks hold a third of their deposits in reserve. (a) What are the reserve-deposit ratio (rr), currency-deposit ratio (cr), money supply (M), and the money multiplier (m)? (b) One day, fear about the banking system strikes the population, and people now want to hold half of their money in the form of...
suppose the reserveraho is 5 percent, banks do not hold excess reserves, people do not hold...
suppose the reserveraho 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. Bank reserves decrease by $20 million, and the money supply eventually decreases by S400 million O Bank reserves increase by $20 million, and the money supply eventually increases by 5400 million O Bank reserves decrease by $20 million, and the...
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,...
3. In a country Panicia, the monetary base is $1,000. People hold a third of their...
3. In a country Panicia, the monetary base is $1,000. People hold a third of their money in the form of currency (and thus two-thirds as bank deposits). Banks hold a third of their deposits in reserve. a. What are the reserve deposit ratio, the currency deposit ratio, the money multiplier, and the money supply? b. One day, fear about the banking system strikes the population, and people now want to hold half their money in the form of currency....
Suppose that the reserve ratio is 8.5 percent. An additional $10,000 of excess reserves has the...
Suppose that the reserve ratio is 8.5 percent. An additional $10,000 of excess reserves has the potential to increase the money supply by more than $100,000. Select one: True False f the public decides to hold more currency and, therefore, less money as deposits in banks, then bank reserves decrease and the money supply eventually decreases. Select one: True False Currency held by the public is part of the money supply, but currency held by banks in the bank vault...
Money Multiplier (Based on Mankiw Ch.4 #5). Consider an economy with a monetary base of $1,000. People hold a third...
Money Multiplier (Based on Mankiw Ch.4 #5). Consider an economy with a monetary base of $1,000. People hold a third of their money in the form of currency (and thus two-thirds as bank deposits). Banks hold a third of their deposits in reserves. a.) What is the reserve-deposit ratio, the currency-deposit ratio, the money multiplier, and the money supply? b.) Say a financial crisis takes place which strikes fear in the population about the safety of banks. As a result,...
Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits.
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 $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...
Assume that the banking system has total reserves of $200 billion. Assume also that required reserves...
Assume that the banking system has total reserves of $200 billion. Assume also that required reserves are 12.5 percent of checking deposits and that banks hold no excess reserves and households hold no currency. The money multiplier is ____. The money supply is ____ billion. Suppose the Fed raises required reserves to 16 percent of deposits. The new money multiplier is____, and the money supply Increases/Decreases to _____ billion.
Question 5 2 pts Year 2012 2013 2014 Adult Population 2,000 3,000 3,200 Number of Employed 1,400 1,300 1,600 200 600 200 Number of Unemployed The number of adults not in the labor force of Aridia in 2012 was O 400 O 1,800 O 200 600 Question 6 The regional Federal Reserve Banks O are not allowed to make loans to banks in their region. O regulate banks in their regions. o have more voting members on the FOMC than...
suppose the reserveraho 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. Bank reserves decrease by $20 million, and the money supply eventually decreases by S400 million O Bank reserves increase by $20 million, and the money supply eventually increases by 5400 million O Bank reserves decrease by $20 million, and the...
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,...
3. In a country Panicia, the monetary base is $1,000. People hold a third of their money in the form of currency (and thus two-thirds as bank deposits). Banks hold a third of their deposits in reserve. a. What are the reserve deposit ratio, the currency deposit ratio, the money multiplier, and the money supply? b. One day, fear about the banking system strikes the population, and people now want to hold half their money in the form of currency....
Money Multiplier (Based on Mankiw Ch.4 #5). Consider an economy with a monetary base of $1,000. People hold a third of their money in the form of currency (and thus two-thirds as bank deposits). Banks hold a third of their deposits in reserves. a.) What is the reserve-deposit ratio, the currency-deposit ratio, the money multiplier, and the money supply? b.) Say a financial crisis takes place which strikes fear in the population about the safety of banks. As a result,...
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