China Cuts Reserve Requirements The People's Bank of China (PBOC) has cut the reserve requirement for small and medium-sized banks. The cut from 7 percent to 6 percent will free up 400 billion yuan ($56 billion) in reserves for the country's 4,000 affected banks, many of which serve rural areas. The reserve cuts are seen as another response to the economic calamity caused by the coronavirus pandemic. Economic lockdowns in China and around the world have hit Chinese exports hard, with GDP stalling and unemployment rising. The PBOC's cuts are intended to encourage more lending and borrowing, especially among smaller enterprises. Source: News reports, April 5-8, 2020.

China Cuts Reserve Requirements The People's Bank of China (PBOC) has cut the reserve requirement for small and medium-sized banks. The cut from 7 percent to 6 percent will free up 400 billion yuan ($56 billion) in reserves for the country's 4,000 affected banks, many of which serve rural areas. The reserve cuts are seen as another response to the economic calamity caused by the coronavirus pandemic. Economic lockdowns in China and around the world have hit Chinese exports hard, with GDP stalling and unemployment rising. The PBOC's cuts are intended to encourage more lending and borrowing, especially among smaller enterprises. Source: News reports, April 5-8, 2020.

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter16: Monetary Policy

Section: Chapter Questions

Problem 1SQP

See similar textbooks

Similar questions

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…
The table below provides data for a hypothetical economy. Currency outside chartered banks$27 billionChequable notice deposits at near banks$19 billionPersonal term deposits at near banks$20 billionNon-chequable notice deposits at chartered banks$38 billionPersonal term deposits at chartered banks$47 billionOther liquid assets included in M2+$22 billionPublicly held demand deposits at chartered banks$14 billionCurrency inside chartered banks$17 billionChequable notice deposits at chartered banks$30 billionNon-chequable notice deposits at near banks$34 billionCryptocurrency assets held by country residents$32 billion Based on this data: a. M1+ is $ billion b. M2 is $ billion c. M2+ is $ billion
Suppose 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…
Economi 15. The federal deposit insurance corporation (FDIC) insures individual bank accounts up to $250,000 per account. Which of the following statements regarding FDIC insurance is true? FDIC insurance a. does not eliminate the need for reserve requirements because bank runs can't be eliminated in a fractional reserve banking system b. has prevented bank runs because the FDIC pays depositors interest at the discount rate on their accounts c. eliminates the need for reserve requirements because banks are not liable for any depositor losses d. works in coordination with reserve requirements to ensure depositor confidence, preventing bank runs.
Bank Three currently has $600 million in transaction deposits on its balance sheet. The Federal Reserve has currently set the reserve requirement at 10 percent of transaction deposits. (LG 4-3) If the Federal Reserve decreases the reserve requirement to 8 percent, show the balance sheet of Bank Three and the Federal Reserve System just before and after the full effect of the reserve requirement change. Assume Bank Three withdraws all excess reserves and gives out loans and that borrowers eventually return all of these funds to Bank Three in the form of transaction deposits. Redo part (a) using a 12 percent reserve requirement.
An economy has a reserve ratio equals to 12%. The society is holding 10% of the deposit in the form of cash. a) If the high-powered money (H) is RM100 billion, how much is the money supply in this economy? b) Say the Central Bank targets the money supply is RM650 billion. How much the high-powered money (H) in question a) above should change to achieve this target? *Prioritize question b
Kindly provide a correct answer and a detailed explanation with proper drawings; otherwise, I will have to give multiple downvotes. Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate. 5.Draw a picture of a money market equilibrium. Show the effect of the Federal Reserve increasing the money supply. Now draw a picture of the Planned Aggregate Expenditure/ Equilibrium Output picture. Show the effect of this change on the picture. Now draw an AS/AD picture. Show the effect of this change on that picture.
Which of the following are true: People demand cash only to finance transactions. TRUE / FALSE The demand for money has fallen during the Covid-19 pandemic TRUE / FALSE During times of economic uncertainty people hoard cash. TRUE / FALSE
Marly Bank currently has $650M in transaction deposits on its balance sheet. The current reserve requirenment is 10 percent, but the Federal Reserve is decreasing this requirement to 9 percent. Show the balance sheet for the federal reserve and Marly Bank if Marly Bank converts all excess reseves to loans, but borrowers return only 60 percent of these funds to National Bank as transaction deposit.
Suppose that National bank has $36 million in checkable deposits, Commonwealth bank has $45 million in checkable deposits and the required reserve ratio for checkable deposits is 10%. If the National bank has $4 million in reserves and Commonwealth has $5 million iin reserves, how much excess reserves does each bank have? Suppose that a customer of the National bank writies a check for $2 million to a real estate broker who deposits the check at Commonwealth bank. After the check clears, how much excess reserves does each bank have?
Over the last 10 years the Federal Reserve has substantially changed the way itoperates. What is different about how the Federal Reserve now conducts policy? a) It is more secretive about interest rate and other policy changes b) it gives the public forward guidance on what it will do c) it places fewer regulations on commercial banks d) it discuesses its policy in public and asks for guidance from Congress
The Covid-19 pandemic will have a negative impact on... a) Equilibrium in the money market and goods market b) Aggregate supply and demand c) Interest rates, capital outflows and foreign exchange rates d) All the answers above are correct e) All the answers above are wrong