Consider an open market purchase of 7 billionTL by Central Bank of Republic of Turkey (CBRT). Assuming required résérve Patio 10%, he which bank central bank buys securities does not want to hold excess reserves, and people does not wish to hold currency, Your answer: O The simple deposit expansion multiplieris 10. O M1 rises by 70billionTL. O The monetary base expands by 7billionTL. The increase in deposits in the banking system is 70billionTL.

Consider an open market purchase of 7 billionTL by Central Bank of Republic of Turkey (CBRT). Assuming required résérve Patio 10%, he which bank central bank buys securities does not want to hold excess reserves, and people does not wish to hold currency, Your answer: O The simple deposit expansion multiplieris 10. O M1 rises by 70billionTL. O The monetary base expands by 7billionTL. The increase in deposits in the banking system is 70billionTL.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 3.5P

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. Suppose that the T-account for Nan Bank Inc. is as follows:Assets LiabilitiesReserves $100,000Loans $400,000 Deposits $500,000. If the Bank of Canada requires banks to hold 5 percent of deposits reserves, how much in excess reserves does Nan Bank Inc. now hold?Assume that all other banks hold only the required amount of reserves. IfNan Bank Inc. decides to reduce its reserves to only the required amount, byhow much would the economy's money supply increase?
Consider a situation where the central bank increases the money supply. equal, if nominal GDP increased by $800 billion during a time when veloc did the central bank increase the money supply? O $400 million O $200 million O $200 billion O $400 billion No new data to save. Last check
Refer to table below. Suppose that the Fed had decided to set the U.S. money supply in December 1932 and in December 1933 at the same value as in December 1930. a. Assuming that the values of currency held by the public and the reserve-deposit ratio had remained as given in the table, what should the values of bank reserves be to reach the stated target for the U.S. money supply? Instruction: enter all responses rounded to two decimal places Money Supply Currency held by public Reserve-deposit ratio Actual Bank reserves Needed Bank reserves December 1930 $44.1 billion $3.85 billion 0.075 $3.31 billion $3.31 billion December 1932 $44.1 billion $4.82 billion 0.109 $3.18 billion billion December 1933 $44.1 billion $4.85 billion 0.133 $3.45 billion billion b. In order to accomplish this objective, the Fed would have had to conduct open market purchases to increase bank reserves by $ _______ billion in 1932 and $_________ billion in 1934.
Let the reserve requirement be 15 percent for deposits. Assume there are not excess reserves. If the currency demand equals 40 percent of deposits and total reserves equal $60 billion, then an open markey sale of $1.5 billion in government bonds should Reduce the money supply from $160 billion to $156 billion Increase the money supply from $400 billiion to $410 billion Reducce the money supply from $400 billion to $390 bilion Reduce the money supply from $560 billion to $546 billion
10 Look up data on FRED on what happened to the money supply and excess reserves in the 2007-2009 Great Recession and the 2020 Covid-19 contraction. By how much did M1 Money Stock and Excess Reserves increase in absolute dollars and in percentage terms from December 2007 to April 2014? How much did M1 Money Stock and Excess Reserves increase in absolute dollars and in percentage terms from February 2020 to May 2021?
anks in New Transylvania have a desired reserve ratio of 10 percent of deposits and noexcess reserves. The currency drain ratio is 50 percent of deposits. Now suppose that thecentral bank increases the monetary base by $900 billion.i. How much do the banks lend in the first round of the money creation process?ii. How much of the initial amount loaned flows back to the banking system as newdeposits?iii. How much of the initial amount loaned does not return to the banks but is heldas currency?iv. Why does a second round of lending occur?v. Calculate money multiplier in this example?vi. What is the final increase in the quantity of money?
§Suppose that the T-account for First National Bank is as follows: Assets Liabilities Reserves: 90.000-TL Deposits: 500.000-TL Loans: 410.000-TL § §If the Central Bank requires banks to hold 10% of deposits as reserves, how much in excess reserves does First National Bank now hold? MM=1/rr MM=1/(10/100) MM=10 40000*10=400000TL §Assume that all other banks hold only the required amount of reserves. If First National decides to reduce its reserves to only the required amount, by how much would the economy’s money supply increases?
Given the following ratios, show how money multiplies and the total increase in money supply if the monetary base (MH) increases by $520. Your answer should include the changes in currency in circulation (C), deposits (D), required reserves (R) and loans disbursed by commercial bank (L).b=C/D=0.25X=R/D=0.12
c. Define the term money multiplier? d. Assume that Lucky Bank is required to hold a 10% deposits as reserves, and there is a $3000 increase in demand deposits. Calculate the money multiplier? How much additional new demand deposits couldthe $3,000 deposit support?
7. According to your text , if interest rates are allowed to vary more from year to year then________ is / are likely to vary more from year to year . O. real GDP O. exchange rates O. Both a and b O. Neither a nor b : interest rate variation , like relative price variation , is helpful for the economy . 8. According to your text , central bank transparency O. is a political necessity that interferes with the effective functioning of central banks . O. has been sharply reduced at most central banks during the last twenty years . O. helps build and preserve public support for central bank independence . O. is mostly a media issue and is not very important in practice .
Assume the Federal Reserve inserts $25,000 of reserves into the banking system (don't worry about how this is done for now). What isthe maximum amount deposits will increase by assuming banks hold zero excess reserves and all currency is deposited? Please round totwo decimal places where needed and do not enter the dollar sign ($).
Assume there is no leakage from the banking system and that all commercial banks areloaned up. The required reserve ratio is 20%. If the Central Bank sells 5 million TL worthof government securities to the public, the change in the money supply will bea) -20 million TL.b) -25 million TL.c) 25 million TL.d) 20 million TL.