i need the answer quickly Assume that a bank receives a deposit of $1,000 in cash, puts aside $200 as requiredreserves, and makes a loan of $800, these transactions imply that:the money multiplier is 10.the money multiplier is 5:the money multiplier is 4.the money multiplier is 2.the money multiplier is 2.

reserve ratio refers that the ratio which is determined by the central bank for the domestic bank…

Answered: Assume that a bank receives a deposit…

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter25: Money Creation

Section: Chapter Questions

Problem 8SQP

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What is the formula for the money multiplier?
Suppose an increase in the monetary base of $200,000 increases the quantity of money by $800,000. Calculate the money multiplier. The money multiplier is _____ Thanks
Suppose following a 25% increase in the monetary base, the money supply rises by 80%. The simple money multiplier is _______.
Explanation it correctly Q)Assume that some people who receive bank loans do not deposit the full amount of the loan into a bank. This will cause the money multiplier to be the bank deposits multiplier. A) smaller than B) greater than C) neither greater than or smaller than D) the same as
Most people in the country of Classica tend to keep $3 out of every $100 of their cash holdings in their wallets. The central bank has instructed the commercial banks to also hold 4% of all bank deposits as reserves. Calculate the extended money multiplier Extended Money Multiplier = (1+C/D) / (R/D+C/D) (1+0.03) / (0.04+0.03) = 14.71 The extended money multiplier is 14.71 Suppose that in 2018 customers deposit $4,000 into their bank accounts. Based on the extended money multiplier calculated in part (i), calculate the total amount which the money supply in the banking system will eventually increase to. Show all steps involved in the calculation.
The money multiplier defines how much: Responses A. consumer demand increases following an increase in government spending. B. the money supply increases when investment banks underwrite corporate bond offerings. C. the money supply increases in response to an increase in bank deposits. D. GDP increases as a result of an increase in investment expenditure.
When the Central Bank increases its discount rate, A. Monetary base increasesB. monetary base decreases C. Money multiplier increases D. Money multiplier decreases
Suppose that the reserve requirement for checking deposits is 16 percent and that banks do not hold any excess reserves. If the Fed sells $2 million of government bonds, the economy's reserves (either increase or decrease) by $______million, and the money supply will (increase or decrease) by $______million. Now suppose the Fed lowers the reserve requirement to 8 percent, but banks choose to hold another 8 percent of deposits as excess reserves. True or False: The money multiplier will increase. False True or False: As a result, the overall change in the money supply will increase. True
Assume that the banking system has total reserves of Rs.250 billion. Assume also that required reserves are 10 percent of checking deposits and that banks hold no excess reserves and households hold no currency. Calculate the money multiplier? Calculate the money supply?(If the State Bank of Pakistan now raises required reserves to 12.5 percent of deposits,) Calculate the money multiplier?
Use simplified money multiplier formula to answer this question. Assume banks do not keep excess reserves. Suppose households $100 bln in cash and $800 bln in bank deposits. Money multiplier in this economy is equal 10.What happens with money supply when households use $10 bln to fund their digital wallets with cash to set up accounts on such platforms as Apple wallet, Google wallet, Samsung wallet, Venmo, and others.
Currently the Fed Funds interest rate and the interest rate on reserves are virtually equal to zero. The Fed is anticipated to raise the interest rate it pays on reservessometime this Fall. What would likely happen to the Fed Funds rate if this happens? Draw a diagram of the Fed Funds market. What will happen to the money multiplier?
Suppose that during a particular year customers deposit $4,000 into their bank accounts, and extended money multiplier is equal to 25. Calculate the total amount which the money supply in the banking system will eventually increase to. Show all steps involved in the calculation.

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Assume that a bank receives a deposit of $1,000 in cash, puts aside $200 as required reserves, and makes a loan of $800, these transactions imply that: the money multiplier is 10. the money multiplier is 5. the money multiplier is 4. the money multiplier is 2. the money multiplier is 2.