Suppose that you take $350 in currency out of your pocket and deposit it in your...
Suppose that you take $350 in currency out of your pocket and
deposit it in your checking account. If the required reserve ratio
is 12%, what is the largest amount (in dollars) by which the money
supply can increase as a result of your action?
Include the $350 as part of the new money supply and assume the
bank does not hold excess reserves.
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Suppose that you take $350 in currency out of your pocket and
deposit it in your...
1. Suppose you withdraw $500 from your checking account at your bank, which has a required...
1. Suppose you withdraw $500 from your checking account at your bank, which has a required reserve ratio of 30%. Initially, as a result of your this transaction, the size of M1 will.... (Increase/decrease/remain unchanged) . Before any further actions by your bank, the reserves in your bank..... Increase/decrease/remain unchanged) by... while the excess reserves of your bank ..... (Increase/decrease/remain unchanged) by .... 2. Suppose that the general public decided to decrease its holdings of currency and increase its checking...
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...
Suppose the Federal Reserve purchases $10,000 of Treasury bonds from you and that you deposit the...
Suppose the Federal Reserve purchases $10,000 of Treasury bonds from you and that you deposit the $10,000 into your checking account deposit at Bank Y. Assume that Bank Y has no excess reserves at the time you make your deposit and that the required reserve ratio is 20 percent. a. Use a T-account to show the initial effect of this transaction on Bank Y's balance sheet. b. Suppose that Bank Y makes the maximum loan they can from the funds...
1. Suppose that households wished to maintain $1.00 in pocket money (currency and coin) and $10.00...
1. Suppose that households wished to maintain $1.00 in pocket money (currency and coin) and $10.00 in liquid savings assets (small CDs, money funds, and savings accounts) for every $1.00 in their checking accounts (transaction deposits). If banks choose their desired reserves to be ten cents for every dollar of transaction deposits, what are the reserve multiplier and the money (M2) multiplier if the Federal Reserve’s reserve requirement ratio is: Answers/Explanation 2. If households’ currency-deposit ratio is 1.25, and they...
Question 1. (15 points) Suppose that currency in circulation is $600 billion, the amount of chequable...
Question 1. (15 points) Suppose that currency in circulation is $600 billion, the amount of chequable deposits is $900 billion, and excess reserves are $15 billion and the desired reserve ratio is 10%. a. Calculate the money supply, the currency deposit ratio, the excess reserve ratio, and the money multiplier. b. Suppose the central bank conducts an unusually large open market purchase of bonds held by banks of $1400 billion due to a sharp contraction in the economy. Assuming the...
1. Suppose that currency in circulation is $600 billion, the amount of checkable deposits is $900...
1. Suppose that currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, required reserve on checkable deposits is 10% and excess reserves are $15 billion. a. Calculate the money supply, the currency deposit ratio, the excess reserve ratio, and the money multiplier. Suppose the central bank conducts an unusually large open market purchase of bonds held by banks of $1400 billion due to a sharp contraction in the economy. Assuming the ratios, you calculated in...
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity...
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 5%. Gilberto, a client of First Main Street Bank, deposits $200,000 into his checking account at First Main Street Bank Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Labilities Complete the following table to show the effect of a...
Suppose that a bank with no excess reserves receives a deposit into a checking account of...
Suppose that a bank with no excess reserves receives a deposit into a checking account of $19,000 in currency. If the required reserve ratio is 0.07, what is the maximum amount that the bank can lend out? The bank can lend out $(Enter your response as an integer) Enter your answer in the answer box
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity...
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. The Federal Reserve buys a government bond worth $250,000 from Alex, a client of First Main Street Bank. He deposits the money into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans)....
Suppose that the public wishes to hold $0.35 in pocket money (currency and coin) and $0.25...
Suppose that the public wishes to hold $0.35 in pocket money (currency and coin) and $0.25 in time and savings deposits. Suppose that banks wish to hold $0.20 for each new dollar of transaction money received. Suppose that $0.05 finds its way outside of the domestic banking system. Suppose the reserve requirement on transaction deposits is 3 percent and that on time and savings deposits is 4%. (20 points) a. What is the size of the transaction deposit multiplier? Make...
Suppose the Federal Reserve purchases $10,000 of Treasury bonds from you and that you deposit the $10,000 into your checking account deposit at Bank Y. Assume that Bank Y has no excess reserves at the time you make your deposit and that the required reserve ratio is 20 percent. a. Use a T-account to show the initial effect of this transaction on Bank Y's balance sheet. b. Suppose that Bank Y makes the maximum loan they can from the funds...
Question 1. (15 points) Suppose that currency in circulation is $600 billion, the amount of chequable deposits is $900 billion, and excess reserves are $15 billion and the desired reserve ratio is 10%. a. Calculate the money supply, the currency deposit ratio, the excess reserve ratio, and the money multiplier. b. Suppose the central bank conducts an unusually large open market purchase of bonds held by banks of $1400 billion due to a sharp contraction in the economy. Assuming the...
1. Suppose that currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, required reserve on checkable deposits is 10% and excess reserves are $15 billion. a. Calculate the money supply, the currency deposit ratio, the excess reserve ratio, and the money multiplier. Suppose the central bank conducts an unusually large open market purchase of bonds held by banks of $1400 billion due to a sharp contraction in the economy. Assuming the ratios, you calculated in...
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 5%. Gilberto, a client of First Main Street Bank, deposits $200,000 into his checking account at First Main Street Bank Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Labilities Complete the following table to show the effect of a...
Suppose that a bank with no excess reserves receives a deposit into a checking account of $19,000 in currency. If the required reserve ratio is 0.07, what is the maximum amount that the bank can lend out? The bank can lend out $(Enter your response as an integer) Enter your answer in the answer box
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. The Federal Reserve buys a government bond worth $250,000 from Alex, a client of First Main Street Bank. He deposits the money into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans)....
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