Homework Answers
(Part e)
When $500 is deposited,
Total increase in money supply = Increase in deposit / Required reserve ratio = $500 / 0.25 = $2,000
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just question e please 10. Suppose the reserve ratio is 25%. Bank One has $12,000 deposits and $3,000 bank capital (...
10. Suppose the reserve ratio is 25%. Bank One has $12,000 deposits and $3,000 bank capital (owners' equity). Bank One...
10. Suppose the reserve ratio is 25%. Bank One has $12,000 deposits and $3,000 bank capital (owners' equity). Bank One has $3,000 securities. What are the reserves and loans? a. Draw the bank balance sheet with reserves, deposits, loans, securities and capital. b. What is the total amount of reserves? c. What is the total amount of loans? d. What is the leverage ratio? e. If $500 are deposited, how much money would be created with a reserve ratio of...
The Fed conducts an open market sale of bonds. $50 million and the reserve ratio is...
The Fed conducts an open market sale of bonds. $50 million and the reserve ratio is 20% and after the sale. a. Does the money supply INCREASE or DECREASE? (circle) b. How much does the money supply change? 9. Suppose a country has a 100% reserve requirement for all banks. a. How much does the money supply change from a deposit of $100 by a housen b. What is the role of banks in moving funds from depositors to borrowers?...
Explain the key role of a central bank (such as the Federal Reserve) in the monetary...
Explain the key role of a central bank (such as the Federal Reserve) in the monetary system. What happens to the money supply when a central bank (such as the Federal Reserve) buys bonds? Explain. You run a bank. The current reserve ratio mandates holding reserves equal to 20% of deposits. If someone comes into your bank and deposits $10,000, by how much will the money supply in the economy increase? You have equity (a capital share) in a bank....
a. Explain the key role of a central bank (such as the Federal Reserve) in the...
a. Explain the key role of a central bank (such as the Federal Reserve) in the monetary system. (4 points). What happens to the money supply when a central bank (such as the Federal Reserve) buys bonds? Explain. (4 points). You run a bank. The current reserve ratio mandates holding reserves equal to 20% of deposits. If someone comes into your bank and deposits $10,000, by how much will the money supply in the economy increase? (4 points) You have...
Assets Reserves Loans Liabilities $3,000 Deposits $450 $2,550 The required reserve ratio is 12 percent. Given...
Assets Reserves Loans Liabilities $3,000 Deposits $450 $2,550 The required reserve ratio is 12 percent. Given its deposits of $3,000, the bank is required to hold $ 360 as reserves. (Enter your response as an integer.) The bank holds excess reserves of $ 90. (Enter your response as an integer.) The bank can increase its loans by $ 750 . (Round your response to two decimal places.) Suppose a depositor comes to the bank and withdraws $200 in cash. Show...
The Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio...
The Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. Using balance sheet A, how would this look. How much excess reserves currently exist for the bank? Households deposit $5000 in currency into the bank that is added to reserves. (Show this addition on the balance sheet A. What level of excess reserves does the bank now have? Assuming the excess reserves become loans, what would this look like on the...
The following table represents the balance sheet for Mom and Pop Bank. Suppose that 25% of...
The following table represents the balance sheet for Mom and Pop Bank. Suppose that 25% of borrowers from Mom and Pop Bank default on their loans, so the value of loans falls by 25%. What will be Mom and Pop Bank's new leverage ratio after this wave of defaults? Assets $250 Reserves Loans $800 Liabilities and Owners' Equity Deposits $900 Debt $200 Capital owners' $300 equity) Securities $350 O 6 014 OO O 12 趙 P MacBook Pro
Consider the following Bank balance sheet (assume Reserve Requirement Ratio is zero) Liabilities Assets Excess Reserves...
Consider the following Bank balance sheet (assume Reserve Requirement Ratio is zero) Liabilities Assets Excess Reserves +10M Deposits +100M Government Bonds £20M Loans Ł80M Bank Capital +10M a. Suppose interest rate on loans and government bonds is 10%, interest rate on deposits is 8%, and interest rate on excess reserves is 0%. What is the Bank's net return on assets? Compute the return on equity. b. Suppose the risk weights imposed by the bank regulator on loans, securities, and reserves...
Suppose that the reserve ratio is 7 percent and that a bank has $3000 in deposits....
Suppose that the reserve ratio is 7 percent and that a bank has $3000 in deposits. What are its required reserves? a. $50 b. $210 c. $510 d. $1200
1) Bank 1 has deposits of $4141 and reserves of $455. If the required reserve ratio...
1) Bank 1 has deposits of $4141 and reserves of $455. If the required reserve ratio is 10%, what is the value of the bank's excess reserves? Enter a whole number with no dollar sign. Round to the nearest whole number. 2) In a fractional reserve banking system a. banks hold a fraction of deposits as reserves. b. the reserve ratio measures the percentage of deposits available to be lent out. c. banks hold a fraction of reserves as deposits....
10. Suppose the reserve ratio is 25%. Bank One has $12,000 deposits and $3,000 bank capital (owners' equity). Bank One has $3,000 securities. What are the reserves and loans? a. Draw the bank balance sheet with reserves, deposits, loans, securities and capital. b. What is the total amount of reserves? c. What is the total amount of loans? d. What is the leverage ratio? e. If $500 are deposited, how much money would be created with a reserve ratio of...
The Fed conducts an open market sale of bonds. $50 million and the reserve ratio is 20% and after the sale. a. Does the money supply INCREASE or DECREASE? (circle) b. How much does the money supply change? 9. Suppose a country has a 100% reserve requirement for all banks. a. How much does the money supply change from a deposit of $100 by a housen b. What is the role of banks in moving funds from depositors to borrowers?...
Assets Reserves Loans Liabilities $3,000 Deposits $450 $2,550 The required reserve ratio is 12 percent. Given its deposits of $3,000, the bank is required to hold $ 360 as reserves. (Enter your response as an integer.) The bank holds excess reserves of $ 90. (Enter your response as an integer.) The bank can increase its loans by $ 750 . (Round your response to two decimal places.) Suppose a depositor comes to the bank and withdraws $200 in cash. Show...
The following table represents the balance sheet for Mom and Pop Bank. Suppose that 25% of borrowers from Mom and Pop Bank default on their loans, so the value of loans falls by 25%. What will be Mom and Pop Bank's new leverage ratio after this wave of defaults? Assets $250 Reserves Loans $800 Liabilities and Owners' Equity Deposits $900 Debt $200 Capital owners' $300 equity) Securities $350 O 6 014 OO O 12 趙 P MacBook Pro
Consider the following Bank balance sheet (assume Reserve Requirement Ratio is zero) Liabilities Assets Excess Reserves +10M Deposits +100M Government Bonds £20M Loans Ł80M Bank Capital +10M a. Suppose interest rate on loans and government bonds is 10%, interest rate on deposits is 8%, and interest rate on excess reserves is 0%. What is the Bank's net return on assets? Compute the return on equity. b. Suppose the risk weights imposed by the bank regulator on loans, securities, and reserves...
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