Homework Answers
a
|
Money Multiplier = |
1 |
|
Required Reserve Ratio |
|
Required reserve ratio is the fraction of deposits which a bank is required to hold in hand.
Deposit= $1 million
Reserve requirement=15%
Money multiplier= 1/.15=6.67
The money multiplier can be used to determine the total increase in money supply:
Total Increase in Money supply= Money Multiplier x Deposit.
= 6.67 x $1 million= $6.67 million.
b
If reserve requirement is 40%
Money multiplier=1/.40=2.5
Total Increase in Money supply= Money Multiplier x Deposit.
= 2.5 x $1 million= $2.25 million.
Only $2.25 million new money would be created.
Add Answer to:
Assume that $1 million is deposited in a bank with a reserve requirement of 15 percent....
Suppose that in a given month $40 million is deposited into the banking system while $50 million is withdrawn. Assume that the reserve requirement is 20 percent and that the banking system had no excess reserves at the beginning of the month. What is the
Suppose that in a given month $40 million is deposited into the banking system while $50 million is withdrawn. Assume that the reserve requirement is 20 percent and that the banking system had no excess reserves at the beginning of the month. What is the maximum change that can be expected in the money supply as a consequence of these deposits and withdrawals? Instructions: Enter a positive number to show an increase and a negative number to show a decrease. $ million
Assume that the required reserve ratio is 15 percent and that SAMA sells SR3 million worth...
Assume that the required reserve ratio is 15 percent and that SAMA sells SR3 million worth of government bonds to a costumer who pays with a check drawn on the Riyad Bank. we got money supply change by 20,000,0000 . What is the maximum change in the money supply that can result from this sale?
Assume a bank has to keep a 25% Reserve Ratio. If $100 is deposited at the...
Assume a bank has to keep a 25% Reserve Ratio. If $100 is deposited at the bank, how much can the bank lend out of that deposit? If the loan is deposited at another bank with a 25% Reserve Ratio, how much will be able to be lent then? If every loan was deposited, how much money would be created (added) to the money supply?
What is the answer? 10. A man deposited 500,000 to City-Bank. The reserve requirement is 20%...
What is the answer?
10. A man deposited 500,000 to City-Bank. The reserve requirement is 20% of total deposits, and the bank does not hold any excess reserves. a. Create a balance sheet of City-Bank with the given information. b. What is the money multiplier and what is the total money that the entire banking system creates. c. use answer in b, and assuming no capital drain, what should be the new legal reserve requirement if the Central bank aims...
Suppose that the reserve requirement for checking deposits is 20 percent and that banks do not...
Suppose that the reserve requirement for checking deposits is 20 percent and that banks do not hold any excess reserves. If the Fed sells $3 million of government bonds, the economy’s reserves bymillion, and the money supply will bymillion. Now suppose the Fed lowers the reserve requirement to 15 percent, but banks choose to hold another 5 percent of deposits as excess reserves. True or False: The money multiplier will decrease. True False True or False: As a result, the...
The Fed decides to buy $50 million in bonds. A. Show the initial T-account at the bank when this gets deposited. B. If the Reserve Requirement is 25%, show the T-account after the first loan is made....
The Fed decides to buy $50 million in bonds. A. Show the initial T-account at the bank when this gets deposited. B. If the Reserve Requirement is 25%, show the T-account after the first loan is made. C. What is the maximum amount the money supply could expand by from this purchase. Show the T-account if the maximum number of loans and deposits is made. D. Show the affect of the change in the Money Market (your numbers don’t have...
If banks faced a 100 percent reserve requirement, a decrease in banking reserves of $4 million would:
If banks faced a 100 percent reserve requirement, a decrease in banking reserves of $4 million would:A. increase the money supply by $4 million.B. increase the money supply by $400 million.C. decrease the money supply by $4 million.D. decrease the money supply by $400 million.E do none of the above.
If the Fed purchased $1.0 million in government securities and the reserve requirement was 1%, which...
If the Fed purchased $1.0 million in government securities and the reserve requirement was 1%, which of the following would be the potential impact? The money supply would increase by $1.0 million. The money supply would decrease by $1.0 million. The money supply would increase by $8.3 million. The money supply would decrease by $8.3 million. none of the above
The Fed conducts an open market sale of bonds. $50 million and the reserve ratio is...
The Fed conducts an open market sale of bonds. $50 million and the reserve ratio is 20% and after the sale. a. Does the money supply INCREASE or DECREASE? (circle) b. How much does the money supply change? 9. Suppose a country has a 100% reserve requirement for all banks. a. How much does the money supply change from a deposit of $100 by a housen b. What is the role of banks in moving funds from depositors to borrowers?...
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...
What is the answer?
10. A man deposited 500,000 to City-Bank. The reserve requirement is 20% of total deposits, and the bank does not hold any excess reserves. a. Create a balance sheet of City-Bank with the given information. b. What is the money multiplier and what is the total money that the entire banking system creates. c. use answer in b, and assuming no capital drain, what should be the new legal reserve requirement if the Central bank aims...
If the Fed purchased $1.0 million in government securities and the reserve requirement was 1%, which of the following would be the potential impact? The money supply would increase by $1.0 million. The money supply would decrease by $1.0 million. The money supply would increase by $8.3 million. The money supply would decrease by $8.3 million. none of the above
The Fed conducts an open market sale of bonds. $50 million and the reserve ratio is 20% and after the sale. a. Does the money supply INCREASE or DECREASE? (circle) b. How much does the money supply change? 9. Suppose a country has a 100% reserve requirement for all banks. a. How much does the money supply change from a deposit of $100 by a housen b. What is the role of banks in moving funds from depositors to borrowers?...
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...
Most questions answered within 3 hours.
-
How would you train your employees to avoid risks of using
mobile devices?
asked 19 minutes ago -
Assume Kw = 1.01 ✕ 10−14
For pure water, we can calculate [H3O+ ] = [OH...
asked 1 hour ago -
Suppose that on a temperature scale X, water boils at 203.0°X
and freezes at -105.7°X. What...
asked 2 hours ago -
BaS crystallizes in a cubic unit cell with S2- ions on each
corner and each face....
asked 2 hours ago -
A. 0≤P(Oi)≤10≤P(Oi)≤1 for each i
B. P(Oi)≤0P(Oi)≤0
C. P(Oi)=1+P(OCi)P(Oi)=1+P(OiC)
D. P(Oi)≥1P(Oi)≥1
If an experiment consists of...
asked 4 hours ago -
A battery has an emf of 9.20V and an internal resistance of 1.20
ohm. a)What resistance...
asked 4 hours ago -
The area of an elastic circular loop decreases at a constant
rate, dA/dt = −6.60×10−3 m2/s...
asked 5 hours ago -
The denaturation of proteins can be described by the
equilibrium
F⇌U
where F and U represent...
asked 6 hours ago -
Please answer what the maximum and minimum force is, and the
angle on the ion is...
asked 6 hours ago -
implement a program that reads a number of rows and a symbol.
The program will draw...
asked 6 hours ago -
Assume that when adults with smartphones are randomly selected,
45% use them in meetings or classes....
asked 6 hours ago -
Determine the number of formula units of
Na2SO4 and moles of oxygen contained in 8.11
moles...
asked 7 hours ago