Which of the following determines the amount of money the banking system as a whole can create? a) the quan...
Which of the following determines the amount of money the banking system as a whole can create?
a) the quantity of bank reserves
b) the gold reserves held by the Federal Reserve
c) the limit on profits by banks imposed by the U.S. Congress
d)the quantity of vault cash held by banks
Homework Answers
a) the quantity of bank reserves.
The amount of reserves banks hold is related to the amount of money the banking system creates through the money multiplier.
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Which of the following determines the amount of money the banking system as a whole can create? a) the quan...
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Economics question CH30: The Banking System and Money Supply Suppose a country's financial system has $500,000...
Economics question
CH30: The Banking System and Money Supply Suppose a country's financial system has $500,000 in deposits and banks keep 100% in reserves. After a period of time, banks decide to keep $100,000 in reserves while the Central Bank requires 10% reserve ratic i. What is the initial money supply? ii. What is the current amount of loans this banking system is making? iii. What is the money supply after loans are made? iv. Are there any excess reserves?...
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Economics question
CH30: The Banking System and Money Supply Suppose a country's financial system has $500,000 in deposits and banks keep 100% in reserves. After a period of time, banks decide to keep $100,000 in reserves while the Central Bank requires 10% reserve ratic i. What is the initial money supply? ii. What is the current amount of loans this banking system is making? iii. What is the money supply after loans are made? iv. Are there any excess reserves?...
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