Homework Answers
Answer - Option D
5
Simple deposit multiplier = 1/reserve ratio.
= 1/0.20
= 5
Hence deposit multiplier is 5. Other options are not correct
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This Question: 2 pts 3 of 49 (2 complete) ME If the reserve requirement ratio (RR)...
1) Suppose that you deposit $2,000 in your bank and the required reserve ratio is 10...
1) Suppose that you deposit $2,000 in your bank and the required reserve ratio is 10 percent. The maximum loan your bank can made as a direct result of your deposit is Answer: $1,800 2) If the reserve requirement ratio (RR) is 0.20, the simple deposit multiplier is Answer: 5 3) Suppose a bank has $100 million in checking account deposits with no excess reserves and the required reserve ratio is 20 percent. If the Federal Reserve reduces the required...
Question A Suppose that the the reserve ratio is 25%. 1. Define the reserve ratio. 2....
Question A Suppose that the the reserve ratio is 25%. 1. Define the reserve ratio. 2. Define the money multiplier. 3. If people deposit all of their cash in the bank, what is the money multi- plier? 4. If people only deposit 2/3 of their cash in the bank, what is the money multiplier? 5. Explain how buying and selling assets by the central bank increases or decreases the money supply. 6. If people deposit all of their cash in...
Question 3 1 pts The Required Reserve Ratio (RRR) right now on checking deposits is 10%....
Question 3 1 pts The Required Reserve Ratio (RRR) right now on checking deposits is 10%. Joe's Bank has $1,000,000 in checking deposit liabilities. They have $5,000 on reserve deposit with the Federal Reserve Bank in Atlanta. How much cash are they required to have in the vault? O $5,000 $10,000 $100,000 $95,000
ed b. The money supply increases, decreases, remains constant): when the required reserve ratio increases. when...
ed b. The money supply increases, decreases, remains constant): when the required reserve ratio increases. when the discount rate decreases. when the Fed sells securities. when the currency drain ratio increases. when the excess reserve ratio decreases. c. d. e. 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...
2. Suppose that the banks of the nation of Atlantis have a reserve ratio of 20%,...
2. Suppose that the banks of the nation of Atlantis have a reserve ratio of 20%, and there is a new deposit of $500, and that the people of Atlantis have no desire to hold currency. a) Complete the following table. Round Deposits Required Reserves Excess Reserves Loans 1 $500 $100 $400 $400 2 $400 3 4 5 6 7 8 9 10 Total after 10 rounds b) What is the money multiplier?
Question 2 i) Assume that all of the banks in Tilaknesia hold a reserve ratio of 8%. Calculate...
Question 2 i) Assume that all of the banks in Tilaknesia hold a reserve ratio of 8%. Calculate the simple money multiplier. Suppose that on a given day customers deposit $1,250 into their banks. Based on the simple money multiplier calculated in part i), calculate the total amount that the money supply in the banking system will eventually increase to. Now calculate the total amount that the money supply in the banking system will eventually increase to if the reserve ratio...
Atte 24/7P 2 pts 3243 uctions actions NO Question 24 Using the simple deposit multiplier model,...
Atte 24/7P 2 pts 3243 uctions actions NO Question 24 Using the simple deposit multiplier model, what is the required reserve ratio if an increase in reserves of $600 increases deposits by $24,000? 3% O • Previous 4.5% 2.5% 3.5% bok
rect Question 2 0/1 pts The money supply equals monetary base plus money multiplier. • monetary...
rect Question 2 0/1 pts The money supply equals monetary base plus money multiplier. • monetary base divided by money multiplier. money multiplier divided by monetary base. money multiplier multiplied by monetary base. Incorrect Question 3 0/1 pts If the MI multiplier is 3 and the Fed engages in open-market purchases in the amount of S3 billion. then monetary base will increase by S3 billion decline by S9 billion. decline by S3 billion. • increase by $9 billion. rect Question...
8. The reserve requirement, open market operations, and the moneysupply Assume that banks do not hold...
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 $100. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) 15 Money Supply (Dollars) Simple Money Multiplier 10 A lower reserve requirement is...
3. Suppose the reserve ratio changes from 10% to 20%, with all else unchanged and banks...
3. Suppose the reserve ratio changes from 10% to 20%, with all else unchanged and banks fully loaned out. Does the money supply in the economy increase or decrease? Why? Use the simple money multiplier to illustrate your answer.
Question A Suppose that the the reserve ratio is 25%. 1. Define the reserve ratio. 2. Define the money multiplier. 3. If people deposit all of their cash in the bank, what is the money multi- plier? 4. If people only deposit 2/3 of their cash in the bank, what is the money multiplier? 5. Explain how buying and selling assets by the central bank increases or decreases the money supply. 6. If people deposit all of their cash in...
Question 3 1 pts The Required Reserve Ratio (RRR) right now on checking deposits is 10%. Joe's Bank has $1,000,000 in checking deposit liabilities. They have $5,000 on reserve deposit with the Federal Reserve Bank in Atlanta. How much cash are they required to have in the vault? O $5,000 $10,000 $100,000 $95,000
ed b. The money supply increases, decreases, remains constant): when the required reserve ratio increases. when the discount rate decreases. when the Fed sells securities. when the currency drain ratio increases. when the excess reserve ratio decreases. c. d. e. 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...
Atte 24/7P 2 pts 3243 uctions actions NO Question 24 Using the simple deposit multiplier model, what is the required reserve ratio if an increase in reserves of $600 increases deposits by $24,000? 3% O • Previous 4.5% 2.5% 3.5% bok
rect Question 2 0/1 pts The money supply equals monetary base plus money multiplier. • monetary base divided by money multiplier. money multiplier divided by monetary base. money multiplier multiplied by monetary base. Incorrect Question 3 0/1 pts If the MI multiplier is 3 and the Fed engages in open-market purchases in the amount of S3 billion. then monetary base will increase by S3 billion decline by S9 billion. decline by S3 billion. • increase by $9 billion. rect Question...
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 $100. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) 15 Money Supply (Dollars) Simple Money Multiplier 10 A lower reserve requirement is...
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