Considered the following data for an economy. Currency in circulation held by the public: CU = 400 dollars; Monetary Base: B = 800 dollars; currency/deposit ratio: cu = 0.25. What is the value of reserves in this economy?

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In an economy, savings deposits are $10,000 billion, currency is $1,500 billion, checkable deposits are $4,000 billion, money market funds and other deposits are $1,000 billion, and small time deposits are $200 billion. What are the values of M1 and M2? M1 is _______ and M2 is _______.  A. $16,700 billion; $5,500 billion B. $5,500 billion; $16,700 billion C. $15,500 billion; $6,700 billion D. $1,500 billion; $20,700 billion

In an economy, the banks prefer to keep 25% of their deposits in reserve. The population likes to keep their currency holdings equal to 10% of the deposits. Initially, there was zero money in the economy. Then the central bank buys $120 worth of T-bills from a household. The household receives $120 on its checking account. 1. the commercial bank formed reserves and gave out a loan. The population allocated the lent funds between the currency in pockets and checkable accounts. Before anything else happens, how much money is there in the economy at the end of Round 1? ANSWER: 288 For question 1 How is this answer obtained?,    How would you solve question 2.  2. In Round 2, more lending, borrowing, and reserve formation takes place. How much is in DEPOSITS in the economy at the end of Round 2?

If the monetary base equals $400 billion, the currency-deposit ratio equals 0.5, and the reserve-deposit ratio equals 0.1, then the money supply equals: a. $200 billion. b. $400 billion. c. $800 billion. d. $1,000 billion.

[Related to the Solved Problem] Consider the following data: Currency Checkable deposits Bank reserves $930 billion $780 billion $780 billion a. Calculate the values for the currency-to-deposit ratio, the ratio of total reserves to deposits, the monetary base, the M1 money multiplier, and the M1 money supply The currency-to-deposit ratio is (Enter your response rounded to two decimal places.)

Given an initial deposit of $500, and assuming that the required reserve ratio equals 10%, and that bank customers do not hold any currency, fill out the following chart for three rounds of deposits.               Round #               Deposits               Required Reserves               Excess Reserves               Loans  1             _____      _____                  _____       _____                   2             _____      _____                   _____                     _____                   3             _____                     _____                   _____        _____        Fill out the table above.   What is the amount of required reserves in round #2?   What is the amount loaned out by this bank in round #3?   What is the value of the “oversimplified” money multiplier?   If the money creation process continues to its limit, by how much will the money supply ultimately change?  (Hint: Use the money multiplier process formula to answer this question.)

15. All else equal, a decrease in reserve requirements will cause a.state and local government expenditures to fall.b.inflation expectations to fall.c.an increase in the Fed Funds rate.d.excess reserves to increase.e.All of the above will occur. 16. An increase in depository institutions' reserves will causea.the Fed Funds rate to rise.b.planned inventory investment to fall.c.depository institutions to lend more freely.d.foreign investors to buy more T-Bills.e.None of the above.

Table 29-2. An economy starts with $10,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $9,250. The T-account of the bank is shown below. 24. Reserves Loans Assets $750 9,250 Liabilities Deposits $10,000 Refer to Table 29-2. The bank's reserve ratio is a. 7.50 percent. b. 8.12 percent. C. 92.50 percent. d. 100 percent. 25. Refer to Table 29-2. If all banks in the economy have the same reserve ratio as this bank, then the value of the economy's money multiplier is a. 1.33. b. 10.00. C. 10.81. d. 13.33. 26. Refer to Table 29-2. If all banks in the economy have the same reserve ratio as this bank, then an increase in reserves of $150 for this bank has the potential to increase deposits for all banks by a. $866.67. b. $1,666.67. C. $2,000.00. d. an infinite amount.