Bank A has $5,000 in reserves, all required to be held. The required reserve ratio is 10 percent. Bank A has checkable deposits of $500 O$5,000. O $50,000. $500,000,
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- Assume that the required reserve ratio is 5 percent. If a commercial bank has $2 million cash in its vault, $1 million in government securities, $3 million on deposit at the Fed, and $60 million in checkable deposits, then its excess reserves equal Multiple Choice $0 million. $2 million. $5 million. $6 million.Assume that Atlantic National Bank has demand deposits of $100,000 and no excess reserves, and that the reserve requirement is 10 percent. A customer withdraws $5,000 from the bank. To meet the reserve requirement, the bank must increase its reserves by (A) $500 (B) $1,000 (C) $2,000 (D) $4,000 E $4,500Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. Paolo, a client of First Main Street Bank, deposits $500,000 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 Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 500,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Lucia, who immediately uses the funds to write a check to Kenji. Kenji deposits the funds immediately into…
- Suppose again that the Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. The bank now sells $5000 in securities to the Federal Reserve Bank in its district, receiving a $5000 increase in reserves in return. What level of excess reserves does the bank now have? Why does your answer differ (yes, it does!) from the answer to question 9?When a bank suffers deposit outflows and has no excess reserves, the bank will generally first try to raise the funds by O A. calling in some loans. B. borrowing from the Fed. C. selling some of its securities. D. selling some loans. Suppose that a bank has $80 in checkable deposits, reserves of $15, and a reserve requirement of 10%. Also assume that the the bank suffers a $10 deposit outflow. If the bank chooses to borrow from the Fed to meet its reserve requirement, then the bank would need to borrow $. (Round your response to the nearest two decimal place.)In Exhibit 5 if the required reserve ratio is 20 percentfor all banks and every bank in the banking systemloans out all of its excess reserves, then a $10,000deposit from Mr. Brown in checkable deposits couldcreate for the entire banking systema. $8,000 worth of new money.b. $2,000 worth of new money.c. $10,000 worth of new money.d. $40,000 worth of new money.
- Scenario: Aggregate banking statistics show that collectively the banks of CountryA hold $300 million of required reserves, $75 million of excess reserves, have issued $7,500 million of deposits, and hold $225 million of Treasury bonds, and the left $6900 million is all loaned out. Citizens of CountryA prefer to use only demand deposits and so all money is on deposit at the bank. Suppose that the Bank of countryA changes the reserve requirement to 3 percent. Assuming that the banks still want to hold the same amount of excess reserves, what is the value of the money supply after banks eventually adjust everything to the change in the reserve requirement? Group of answer choices: A:$9,375 million B：$10,000 million C：$10,625 million D：$7,500 million Please provide detailed reasoning about this question.Suppose that Third National Bank has reserves of $ 20,000 and checkable deposits of $ 100,000. The reserve ratio is 20 %. The bank sells $ 5,000 in securities to the Federal Reserve Bank in its district, receiving a $ 5,000 increase in reserves in return. What level of excess reserves does the bank now have?Value Total reserves: $ 90 billion Transactions deposits: $ 750 billion Cash held by public: $ 400 billion Required reserve ratio: 0.10 Now assume that the public transfers $40 billion in cash into transactions accounts. How much would the total lending capacity of the banking system be after this portfolio switch? How large would the money supply be if the banks fully utilized their lending capacity?
- 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%. Musashi, a client of First Main Street Bank, deposits $500,000 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). Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these assumptions, the $500,000 injection into the money supply results in an overall increase of ____________ in demand deposits.Suppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 10%. Eric, a Southeast Mutual Bank customer, deposits $250,000 into his checking account at the local branch. Complete the following table to reflect any changes in Southeast Mutual Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 250,000 Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Cho, who immediately uses the funds to write a check to Bob. Bob deposits the funds immediately into his checking…Initially, the banking system has a required reserve ratio of 20.0 percent, $450,000 in total deposits, and no excess reserves. If the Fed reduces the required reserve ratio to 15.0, how much unused lending capacity does the banking system now have? Multiple Choice $750,000 $3,000,000 $337,500 $150,000
