Assume that the economy has initial cash holdings of C=$2000. The required reserve ratio is rr=0.1...
Assume that the economy has initial cash holdings of C=$2000.
The required reserve ratio is rr=0.1
The currency deposit ratio if cr=0
What is the money supply?
| 200 |
| 2000 |
| 20000 |
| 40000 |
| Do not have enough information to answer this question |
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Assume that the economy has initial cash holdings of
C=$2000.
The required reserve ratio is rr=0.1...
How does the reserve ratio change if the Fed increases the required reserve ratio? How does...
How does the reserve ratio change if the Fed increases the required reserve ratio? How does the currency-deposit ratio change if people decide to keep more of their money in cash rather than depositing it? If people decide to hold zero currency (, meaning the currency- deposit ratio goes to zero), what is the relationship between the money supply and the monetary base (what is the money multiplier)? If people decide to hold all of their money as currency and...
The total money supply M has two components: bank deposits D and cash holdings C which we assume to bear a constant rat...
The total money supply M has two components: bank deposits D and cash holdings C which we assume to bear a constant ratio C/D money H is defined as the sum of cash holdings held by the public and the reserves held by the banks. Bank reserves are a fraction of bank deposits, determined by the reserve ratio r, 0 <r<1 c, 0 < c< 1. The high-powered (a) Express the money supply M as a function of high-powered money...
- The total money supply M has two components: bank deposits D and cash holdings C,...
- The total money supply M has two components: bank deposits D and cash holdings C, which we assume to bear a constant ratio C/D=C,0 <<<1. The high-powered money H is defined as the sum of cash holdings held by the public and the reserves held by the banks. Bank reserves are a fraction of bank deposits, determined by the reserve ratio r. 0 <r <1. (0) Express the money supply Mas a function of high-powered money H. (b) Would...
Suppose the currency-to-deposit ratio is 0.25, the excess reserve-to-deposit ratio is 0.03, and the required reserve...
Suppose the currency-to-deposit ratio is 0.25, the excess reserve-to-deposit ratio is 0.03, and the required reserve ratio is 0.1. Which will have a larger impact on the money multiplier: a rise of 0.05 in the currency ratio or in the excess reserve ratio? Instructions: Enter your response rounded to two decimal places. If the currency-to-deposit ratio rises to 0.3, the multiplier will be m = If, instead, the excess reserve-to-deposit ratio rises, the multiplier will be m =
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...
Suppose the monetary base is $500 million, the required reserve ratio is 12%, and the currency-deposit...
Suppose the monetary base is $500 million, the required reserve ratio is 12%, and the currency-deposit ratio is 30%. What would the excess reserve ratio need to be to produce $800 million in the money supply. Holding everything else constant, what effect would an increase in the excess reserve ratio have on the money supply?
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...
2. Let's assume that in a hypothetical economy currency in circulation is $600 billion, the amoun...
2. Let's assume that in a hypothetical economy currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, excess reserves are $15 billion and required reserve ratio is 10%. a. Calculate money supply, currency to deposit ratio, excess reserve ratio and money multiplier. b. Suppose Fed conducts very large open market purchase of $1400 billion due to a sharp recession. Assuming the ratios hold, what will be the effect on money supply? c. Now suppose the...
Suppose that r = required reserve ratio = 0.20 c = {C/D} = currency ratio =...
Suppose that r = required reserve ratio = 0.20 c = {C/D} = currency ratio = 0.45 e = {ER/D} = excess reserves ratio = 0.01 t = {T/D} = time deposit ratio = 1 mm = {MM/D} = money market fund ratio = 0.70 MB = the monetary base = $1,000 billion 1 + C + + mm Given that the formula for the M2 money multiplier is m, = - -, find the value for the M2 money...
Describe how will a bank creates bank money when initial demand deposit is $2000, required ratio...
Describe how will a bank creates bank money when initial demand deposit is $2000, required ratio is 5% and lending the excess reserve to three borrowers.
How does the reserve ratio change if the Fed increases the required reserve ratio? How does the currency-deposit ratio change if people decide to keep more of their money in cash rather than depositing it? If people decide to hold zero currency (, meaning the currency- deposit ratio goes to zero), what is the relationship between the money supply and the monetary base (what is the money multiplier)? If people decide to hold all of their money as currency and...
The total money supply M has two components: bank deposits D and cash holdings C which we assume to bear a constant ratio C/D money H is defined as the sum of cash holdings held by the public and the reserves held by the banks. Bank reserves are a fraction of bank deposits, determined by the reserve ratio r, 0 <r<1 c, 0 < c< 1. The high-powered (a) Express the money supply M as a function of high-powered money...
- The total money supply M has two components: bank deposits D and cash holdings C, which we assume to bear a constant ratio C/D=C,0 <<<1. The high-powered money H is defined as the sum of cash holdings held by the public and the reserves held by the banks. Bank reserves are a fraction of bank deposits, determined by the reserve ratio r. 0 <r <1. (0) Express the money supply Mas a function of high-powered money H. (b) Would...
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...
Suppose the monetary base is $500 million, the required reserve ratio is 12%, and the currency-deposit ratio is 30%. What would the excess reserve ratio need to be to produce $800 million in the money supply. Holding everything else constant, what effect would an increase in the excess reserve ratio have on the money supply?
2. Let's assume that in a hypothetical economy currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, excess reserves are $15 billion and required reserve ratio is 10%. a. Calculate money supply, currency to deposit ratio, excess reserve ratio and money multiplier. b. Suppose Fed conducts very large open market purchase of $1400 billion due to a sharp recession. Assuming the ratios hold, what will be the effect on money supply? c. Now suppose the...
Suppose that r = required reserve ratio = 0.20 c = {C/D} = currency ratio = 0.45 e = {ER/D} = excess reserves ratio = 0.01 t = {T/D} = time deposit ratio = 1 mm = {MM/D} = money market fund ratio = 0.70 MB = the monetary base = $1,000 billion 1 + C + + mm Given that the formula for the M2 money multiplier is m, = - -, find the value for the M2 money...
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