Assume that the following data describe the condition of the banking system: Total Reserves: $150 billion...
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?
Homework Answers
1. M1 = Coins and currency in circulation + Transaction deposits = 100 billion + 600 billion = $ 700 billion
2. Required reserves = 0.15 x transaction deposit = 0.15 x 600 billion = $ 90 billion
3. Excess reserves = Total reserve - Required reserve = 150 billion - 90 billion = $ 60 billion
4. Bank can increase its lending by $ 60 billion.
Add Answer to:
Assume that the following data describe the condition of the
banking system:
Total Reserves: $150 billion...
Assume that the following data describe the condition of the commercial banking 7. system: Total reserves: $ 80 bil...
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...
Suppose a banking system with the following balance sheet has no excess reserves. Assume that ban...
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...
Assume that the banking system has total reserves of $200 billion. Assume also that required reserves...
Assume that the banking system has total reserves of $200 billion. Assume also that required reserves are 12.5 percent of checking deposits and that banks hold no excess reserves and households hold no currency. The money multiplier is ____. The money supply is ____ billion. Suppose the Fed raises required reserves to 16 percent of deposits. The new money multiplier is____, and the money supply Increases/Decreases to _____ billion.
I got most of the questions answered but not sure how to do D & E....
I got most of the questions answered but not sure how to do D
& E.
Value Total reserves Transactions deposits: Cash held by public Required reserve ratio: $60 billion $400 billion $350 billion 0.10 a. How large is the money supply (M1)? s 750 billion b. Are the banks fully utilizing their lending capacity? Banks currently have 200 billion in excess reserves. Now assume that the public deposited another $20 billion in cash in transactions accounts. c. What would...
Assume that banks do not hold excess reserves. Banking system has $50 million in reserves and...
Assume that banks do not hold excess reserves. Banking system has $50 million in reserves and a reserve requirement of 10%. Public holds 20 million in currency . Then the public decides to withdraw $5 million in currency from the banking system. If the banking system wants to keep money supply stable by changing the reserve requirement. What will the new reserve requirement be? A)8.1% B)9.1% C)9.7% D) 10%
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...
6. If reserves in the banking system increase by $100, then checkable deposits will increase by...
6. If reserves in the banking system increase by $100, then checkable deposits will increase by $400 in the simple model of deposit creation when the required reserve ratio is eserve retioKeserves De posi+s 7. If the required reserve ratio is one-third, curreney in circulation is $300 billion, checkable deposits are $900 billion, and there is no excess reserve, then the MI money multiplier is 8. If the required reserve ratio is 10 percent, currency in circulation is $400 billion,...
Assume that banks do not hold excess reserves and that households do not hold currency
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 $400. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. A higher reserve requirement is associated with a _______ money supply. Suppose the Federal Reserve wants to increase the money supply by $200. Again, you can assume that...
Assume that the banking system initially has total reserves of €500 billion, while the reserve requirement...
Assume that the banking system initially has total reserves of €500 billion, while the reserve requirement is equal to 50%. Assume also that banks hold no excess reserves and households hold no currency. What would happen with total reserves and the total amount of money in the economy if the reserve requirement would decrease to 25%? A) The amount of money would increase by 50%, while the amount of reserves would remain the same. B) The amount of money would...
Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits.
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 $400. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. A higher reserve requirement is associated with a _______ money supply. Suppose the Federal Reserve wants to increase the...
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...
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 got most of the questions answered but not sure how to do D
& E.
Value Total reserves Transactions deposits: Cash held by public Required reserve ratio: $60 billion $400 billion $350 billion 0.10 a. How large is the money supply (M1)? s 750 billion b. Are the banks fully utilizing their lending capacity? Banks currently have 200 billion in excess reserves. Now assume that the public deposited another $20 billion in cash in transactions accounts. c. What would...
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...
6. If reserves in the banking system increase by $100, then checkable deposits will increase by $400 in the simple model of deposit creation when the required reserve ratio is eserve retioKeserves De posi+s 7. If the required reserve ratio is one-third, curreney in circulation is $300 billion, checkable deposits are $900 billion, and there is no excess reserve, then the MI money multiplier is 8. If the required reserve ratio is 10 percent, currency in circulation is $400 billion,...
Most questions answered within 3 hours.
-
Write a program to score the paper-rock-scissor game. Each of
two users types in either P,R...
asked 5 minutes ago -
Calculate the equillibrium constent K for a redox reaction that
has E°cell = -.98 V at...
asked 18 minutes ago -
A concave spherical mirror has a radius of curvature of
magnitude 19.6 cm.
(a) Find the...
asked 19 minutes ago -
3. draw a diagram of the magnetic field:
a. around a long straight wire with a...
asked 18 minutes ago -
If you titrated 30.0 mL of 0.1 M HCl with 0.1 M NaOH, indicate
the approximate...
asked 26 minutes ago -
NADH passes electrons into the electron transport chain. List
the carriers that would receive the electrons,...
asked 34 minutes ago -
A cylindrical cable with a resistivity of 1.6x10-8 Ω·m and cross
sectional area of 3x10-5 m^2...
asked 34 minutes ago -
True or False.
A consumer with convex preferences who is indifferent between
the bundles (5,2) and...
asked 38 minutes ago -
A diamond's index of refraction for red light, 656 nm, is 2.410,
while that for blue...
asked 51 minutes ago -
Compare HPLC, SPE, and GC. Identify the differences, the
advantages, and the weaknesses of each method.
asked 52 minutes ago -
Characteristic x-rays emitted by potassium have a wavelength of
0.374 nm. What is the energy of...
asked 55 minutes ago -
there is a function to create two random numbers between 1 and
25 and a function...
asked 1 hour ago