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Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 8 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the "money multiplier" is given by 1/(RR+ER where RR ER Consider the balance sheet of one of several identical banks: the percentage of deposits that banks are required to keep as reserves the percentage of deposits that banks voluntarily hold as excess reserves Reserves Loans Assets 800 2,400 Liabilities and Net Worth 3,200 Checking Deposits Net Worth Total Assets The required reserve ratio in this economy is 17 %. (Enter your response as an integer.) If the total money stock (supply) is $200,000, the total amount of reserves held in the banking system is $. (Enter your response as an integer.) 3,200 Liabilities and Net Worth 3,200

Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 8 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the "money multiplier" is given by 1/(RR+ER where RR ER Consider the balance sheet of one of several identical banks: the percentage of deposits that banks are required to keep as reserves the percentage of deposits that banks voluntarily hold as excess reserves Reserves Loans Assets 800 2,400 Liabilities and Net Worth 3,200 Checking Deposits Net Worth Total Assets The required reserve ratio in this economy is 17 %. (Enter your response as an integer.) If the total money stock (supply) is $200,000, the total amount of reserves held in the banking system is $. (Enter your response as an integer.) 3,200 Liabilities and Net Worth 3,200

ECON MACRO
ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter14: Banking And The Money Supply
Section: Chapter Questions
Problem 3.4P
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Economics 1. what is the total amount of reserves held in the banking system? 2. with commercial banks holding 5% of their checking deposits as excess reserves and the required reserve ratio equal to the value computed above, the central bank should BUY or SELL bonds worth $___. Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 8 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the "money multiplier" is given by 1/(RR+ER). where RR the percentage of deposits that banks are required to keep as reserves ER the percentage of deposits that banks voluntarily hold as excess reserves Consider the balance sheet of one of several identical banks: Reserves Loans Assets Liabilities and Net Worth 800 2,400 Total Assets 3,200 Liabilities and Net Worth The required reserve ratio in this economy is 17 %. (Enter your response as an integer.) If the total money stock (supply) is $200,000, the total amount of reserves held in the banking system is $ (Enter your response as an integer.) Checking Deposits Net Worth 3,200 0 3,200
Transcribed Image Text:Economics 1. what is the total amount of reserves held in the banking system? 2. with commercial banks holding 5% of their checking deposits as excess reserves and the required reserve ratio equal to the value computed above, the central bank should BUY or SELL bonds worth $___. Challenge Problem. Assume that the public in the small country of Sylvania does not hold any cash. Commercial banks, however, hold 8 percent of their checking deposits as excess reserves, regardless of the interest rate. In the questions that follow, the "money multiplier" is given by 1/(RR+ER). where RR the percentage of deposits that banks are required to keep as reserves ER the percentage of deposits that banks voluntarily hold as excess reserves Consider the balance sheet of one of several identical banks: Reserves Loans Assets Liabilities and Net Worth 800 2,400 Total Assets 3,200 Liabilities and Net Worth The required reserve ratio in this economy is 17 %. (Enter your response as an integer.) If the total money stock (supply) is $200,000, the total amount of reserves held in the banking system is $ (Enter your response as an integer.) Checking Deposits Net Worth 3,200 0 3,200
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