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- Having a good commercial bank on your side, like Suntrust or Wells Fargo, will make it much easier for your business to grow and expand Her commercial bank account balance was rarely over two hundred. What is a commercial bank? O a. private bank for consumers and firms © b. government run bank for consumers and firms O c. an investment firm O d.a synonym for credit unionExplain with graph and economic solution Why credit card is not defined as money? How online banking affects money demand? Subject : Macroeconomics13. When the government uses its overdraft facilities at the central bank, it ___________ the quantity of moneyin the economy. This is called ___________________ financing. A Increases; deflationaryB Decreases; inflationaryC Decreases; deflationaryD Increases; inflationary
- (C) what would the lending capacity of the banking system be after this product? (D) How large would the money supply be if the banks fully utilized their lending capacity? (E) What three policy tools could the Fed use to offset that potential growth in M1?Give the cash reserve requirement Cr of 20% initial client's deposit of ish.500,000 and assuming all financial transactions take place in banks. (I).Use 3 banks to demonstrate how commercial banks create credit (II) compute the final and actual deposits.Suppose that the Bank of Canada engages in monetary tightening, raising its Overnight Rate Target from 0.25 to 4 percent, so as to ‘build back better.’ (a) Why would no commercial bank borrow at a rate above the Bank Rate on theovernight market? (b) Why would no commercial bank lend at a rate below 3.75 percent on the overnightmarket?
- Economics all parts Assume that the following data describe the condition of the commercial banking system: Total reserves: $80 billion Transactions deposits: $700 billion Cash held by public: $300 billion Reserve requirement: 0.10 A) How large is the money supply (M1)? B) Are the banks fully utilizing their lending capacity? Banks are/aren’t utilizing their lending capacity because their total reserves are less than/ greater than/ equal to their reserve requirement of $ ___ billion. C) What would happen to the money supply initially (before any lending takes place) if the public deposited another $20 billion in cash in transactions deposits? Assuming the $20 billion in cash is not new money in the system, then M1 will increase/ decrease/ not change. D) How much is total lending capacity of the entire banking system after such a portfolio switch? $ __ billion E) How large would the money supply be if the banks fully utilized their lending capacity? The money supply will…a) What do we mean by fractional reserve banking? b) Banks are required to have specie equal to 12.5% of the currency they have in circulation, Assume banks hold no excess reserves. Banks have $2000 in specie. What is the volume of bank notes in circulation? Are notes full bodied or partial backed? c) What is a demand deposit? Why did banks switch from issuing currency to creating demand deposits?Question 1) Explain what will happen to M1 and M2 measures of money supply if an individual moves money from demand deposit account to a small-denomination time deposit. Question 2) Issuing marketable securities is the primary way businesses finance their operations. Trueor false? Explain your answer. If a four-year bond with a $2000 face value has a coupon rate of 2.5%, and the currentmarket interest rate is 4%, what is the market price of the bond? If this bond sold for $1900, is theyield to maturity greater or less than 4%? Why?
- Assuming an economy have only two commercial banks in it banking system, Classic Bank and Prudent Bank. The following shows the balance sheet of the two banks as at 2019.Classic BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 1,000 Deposits 3,000Securities 2,000 Equity 7,000Loans & Advances 1,000Property, Plant and Equipment 6,000 .10,000 10,000 Prudent BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 600 Deposits 2,500Securities 1,500 Equity 4,400Loans & Advances 800Property, Plant and Equipment 4,000 .6,900 6,900Assume a required reserve ratio of 10%.(a) What is the amount of excess reserves in this commercial banking system? (b)What is the maximum amount that the money supply can be expanded? What would be the effect of a fall in reserve ratio to 5%, on the maximum amount that the money supply can be expanded? (c) Determine the stock of broad money supply assuming the non-bank public holds…a. Distinguish between legally required reserves and excess reserves. b. Why don’t banks hold a 100 percent reserves? How is the amount of reserves bank hold related to the amount of money the banking system creates? 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?(1) If a substantial portion of the public has beenunderserved by conventional banks, as many infintech assert, why shouldn’t the Fed or otherregulatory bodies step in and require banks to servethese customers? (2) What questions should anyoneask before moving personal funds from a conventionalbank to a neobank?