Question

The required reserve ratio is the A. total amount of reserves the bank holds in its vaults. B. total amount of reserves the b

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Option d)

RRR is the fraction of deposits , that the commercial bank should hold in reserves & these should not be provided as loans

Add a comment
Know the answer?
Add Answer to:
The required reserve ratio is the A. total amount of reserves the bank holds in its...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • 1) Bank 1 has deposits of $4141 and reserves of $455. If the required reserve ratio...

    1) Bank 1 has deposits of $4141 and reserves of $455. If the required reserve ratio is 10%, what is the value of the bank's excess reserves? Enter a whole number with no dollar sign. Round to the nearest whole number. 2) In a fractional reserve banking system a. banks hold a fraction of deposits as reserves. b. the reserve ratio measures the percentage of deposits available to be lent out. c. banks hold a fraction of reserves as deposits....

  • (a). The required reserve ratio is 10%. If the Fed increases the amount of excess reserves...

    (a). The required reserve ratio is 10%. If the Fed increases the amount of excess reserves in the banking system by $100,000,000, the maximum potential amount of additional money created in the economy will be ____ dollars. (b). The required reserve ratio is 10%, but due to economic uncertainty, banks are holding an additional 2.5% of their deposits as excess reserves. If the Fed increases the amount of excess reserves in the banking system by $100,000,000 through an open market...

  • Consider the following Bank balance sheet (assume Reserve Requirement Ratio is zero) Liabilities Assets Excess Reserves...

    Consider the following Bank balance sheet (assume Reserve Requirement Ratio is zero) Liabilities Assets Excess Reserves +10M Deposits +100M Government Bonds £20M Loans Ł80M Bank Capital +10M a. Suppose interest rate on loans and government bonds is 10%, interest rate on deposits is 8%, and interest rate on excess reserves is 0%. What is the Bank's net return on assets? Compute the return on equity. b. Suppose the risk weights imposed by the bank regulator on loans, securities, and reserves...

  • 1) Suppose the Fed's required reserve ratio (REQ) is 20%. Further suppose that the Fed buys...

    1) Suppose the Fed's required reserve ratio (REQ) is 20%. Further suppose that the Fed buys $100 million of U.S. Treasury securities from a dealer, Mary Jones, who deposits the check, which is drawn on the Fed, in her bank. This deposit increases her bank's reserve account (∆R) with the Fed by $100 million as well as its demand deposits, its total reserves, and the overall level of M1. What is the money multiplier?1) Suppose the Fed's required reserve ratio...

  • Assets Reserves Loans Liabilities $3,000 Deposits $450 $2,550 The required reserve ratio is 12 percent. Given...

    Assets Reserves Loans Liabilities $3,000 Deposits $450 $2,550 The required reserve ratio is 12 percent. Given its deposits of $3,000, the bank is required to hold $ 360 as reserves. (Enter your response as an integer.) The bank holds excess reserves of $ 90. (Enter your response as an integer.) The bank can increase its loans by $ 750 . (Round your response to two decimal places.) Suppose a depositor comes to the bank and withdraws $200 in cash. Show...

  • ommercial Bank has $5,000 in excess reserves, $90,000 in checkable deposit and the reserve ratio is...

    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...

  • Assets Liabilities Loans Deposits $65 million Required Reserves Excess Reserves $2 million Treasury Securities $5 million...

    Assets Liabilities Loans Deposits $65 million Required Reserves Excess Reserves $2 million Treasury Securities $5 million 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. What is the value of the money multiplier? [Money Multiplier =...

  • When can a bank make loans? a. when it has the minimum amount of required reserves...

    When can a bank make loans? a. when it has the minimum amount of required reserves b. only when it is confident that it can meet all the cash needs of depositors c. only when it has deposited all cash at the Federal Reserve d. when it has reserves greater than the amount of required reserves e. There is not enough information to solve this problem. 37. In a fractional reserve banking system, banks a. are able to create money...

  • If banks are currently holding zero excess reserves and the Fed raises the required-reserve ratio, which...

    If banks are currently holding zero excess reserves and the Fed raises the required-reserve ratio, which of the following will happen? Select one: a. Banks will have a reserve deficiency and will look to sell assets or securities to raise cash (reserves). b. Banks will have positive excess reserves. c. Banks will begin to extend more loans. d. Banks will begin to extend more credit. e. b and d

  • Please consider the following scenario for the Bank of Pizza and Beer. Assuming that total assets...

    Please consider the following scenario for the Bank of Pizza and Beer. Assuming that total assets equal total liabilities, the bank's only liabilities are $15 Million in checkable deposits. The bank currently meets its reserve requirement, and it holds no excess reserves. The required reserve ratio is 10 percent. Assuming that its only assets are legal reserves, loans, and securities, what is the value of loans and securities held by the bank? Please explain and show any calculations.

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT