Assume that the following data describe the condition of the banking system. What would the following values be immediately after a change in the required reserve ratio from 0.20 to 0.175?
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Assume that the following data describe the condition of the banking system. What would the following values be immediately after a change in the required reserve ratio from 0.20 to 0.175?
Assume that the following data describe the condition of the commercial banking 7. system: Total reserves: $ 80 billion Transactions deposits: $700 billion Cash held by public: $30o billion Reserve requirement: o.10 (a) How large is the money supply (M1)? (b) Are the banks fully utilizing their lending capacity? (c) What would happen to the money supply initially if the public deposited another $20 billion in cash in transactions accounts? (d) What would the lending capacity of the banking system...
Assume that the following data describe the condition of the banking system: Total Reserves: $150 billion Transactions deposits: $600 billion saving deposits: 300 Cash held by public: $100 billion Reserve Requirement: 0.15 1. How large is the money supply (M1)? 2.How large are required reserves? 3.How large are excess reserves? 4. By how much could the banks increase their lending activity?
answer these 4. will rate after Assume that the required reserve ratio is 20%. If the Federal Reserve buys $10 million worth of government bonds from the public, the maximum change in the money supply will be: more than 10 million. $2 million. O less than 10 million. o less than 2 million. Assume the reserve ratio is 25 percent and there are $40,000 in new deposits in the banking system. As a result, the money-creating potential of the commercial...
Suppose a banking system with the following balance sheet has no excess reserves. Assume that banks will make loans in the full amount of any excess reserves that they acquire and will immediately be able to eliminate loans from their portfolio to cover inadequate reserves Assets (in Billions) Liabilities (in Billions) Total reserves $ 30 Transactions account 190 deposits 180 400 Loans Total assets 400 Total liabilities 400 Instructions: In part a, enter your response as a percentage rounded to...
I don't understand how to solve for the unused lending capacity I got the answer 74 but it kept saying I was wrong, and I've tried other ways but to no use, so can someone please explain thoroughly how to get the answer to this question
Suppose the simplified consolidated balance sheet shown below is for the entire commercial banking system and that all figures are in billions of dollars. The reserve ratio is 25 percent. Instructions: Refer to the balance sheet below. Enter your answers as whole numbers a. What is the amount of excess reserves in this commercial banking system? $billion. What is the maximum amount the banking system might lend?billion. Show in columns 1(a) and 1(a) how the consolidated balance sheet would look...
The banking system in a country has a required reserve ratio equal to 10.24%. A bank has deposits of $4,883 and total reserves of $1,092. What is the value of the bank's excess reserves? Enter a whole number with no dollar sign. Round to the nearest whole number. You observe wages for a particular occupation have increased over the past few years. Which of the following is the best explanation for this observation? The economy has been in a prolonged...
Refer to the table below and assume that the Feds reserve ratio is 10 percent and the economy is in a severe recession. Also suppose that the commercial banks are hoarding all excess reserves (not lending them out) because of their fear of loan defaults. Finally, suppose that the Fed is highly concerned that the banks will suddenly lend out these excess reserves and possibly contribute to inflation once the economy begins to recover and confidence is restored. a. By...
Assume that the following balance sheet portrays the state of the banking system. The banks currently have no excess reserves. What is the required reserve ratio? 25% 10% 40% 5%Suppose that the Federal Reserve (the "Fed") buys $10 million of bonds from a bond dealer, who immediately deposits the funds in her checking account. What is the initial impact of this transaction? The banking system's holdings of securities fall by $10 million, and the banking system's total reserves rise by $10 million. Checkable deposits...
In the tables that follow you will find consolidated balance sheets for the commercial banking system and the 12 Federal Reserve Banks. Use columns 1 through 3 to indicate how the balance sheets would read after each of transactions a to cis completed. Do not cumulate your answers; that is, analyze each transaction separately, starting in each case from the numbers provided. All accounts are in billions of dollars. a. A decline in the discount rate prompts commercial banks to borrow...