Explain the two components of legal reserve ratio in an economy?

Q: "As announced on March 15, 2020, the Board reduced reserve requirement ratios to zero percent…

A: Required reserve ratio or cash reserve ratio is the minimum amount of total deposit that commercial…

Q: Suppose the reserve ratio is 10%. If the Fed wants to derease the money supply by $10 million, what…

A: Given  Reserve Ratio = 10% Reserve Ratio = 0.10 Decrease in money supply = $10 million

Q: Discuss the Following Concepts/Issues Three specific motives to hold money instead of non-monetary…

A: Money is anything which is accepted as a medium of exchange, store of value , unit of account and…

Q: The legal reserve ratio is 0.2  Find the credit multiplier

A: The data presented in the question above is:- Legal reserve ratio = 0.2 Credit Multiplier is to be…

Q: Why does the Federal Reserve require commercial banks to have reserves? What is the difference…

A: Reserves plays an important role in regulating money supply in the economy. Reserves are assets for…

Q: Federal Reserve functions include al of the following EXCEPT a) providing banking services to…

A: FEDERAL RESERVE FUNCTIONS AS PER OPTIONS GIVEN IN QUESTION 1. The Federal Reserve, as most national…

Q: 5)Answer the question on the assumption that the legal reserve ratio is 10 percent. Suppose that the…

A: Reserve requirement is part of the monetary policy of the central bank to adjust the supply of money…

Q: After a speculative boom, the stock market crashes, and as with previous crashes, causes the wealth…

A: In an economy, the stock market has a significant impact on the price level in the goods market as…

Q: Stephanie deposits $500,000 in Bank of America. Assuming that banks lend out everything that they…

A: Total Deposit = $500,000Required Eeserve = 14%Intrest rate = 2%

Q: Assume that banks are able to lend out 85 cents on every dollar deposited, and a bank receives…

A: Note:- Since we can only answer up to three subparts, we'll answer the first three. Please repost…

Q: Explain why keeping a reserve ratio of zero could be a very bad idea

A: In an economy, Federal Reserve or any other country’s central bank has the responsibility to…

Q: Of the twelve regional Federal Reserve Banks, only the _______ make(s) the purchase and sale of…

A: Answer: Option C (New York Fed) Explanation: The federal reserve makes the purchase and sale of…

Q: Find the value of money creation when the initial deposit  are 20,000 and the legal reserve ratio is…

A:

Q: Analyze what will happen if the number of transactions increases and the central bank increased the…

A: The demand and supply of the money in the economy determines the interest rate in the economy. In…

Q: Answer the next question on the basis of the following consolidated balance sheet of the commercial…

A: Given required reserve ratio = 20 % Required reserves  = 200 $increase in money supply = 1000…

Q: Banks expect an unusually large increase in withdrawals from checking deposit accounts in the…

A: Federal funds rate is the rate at which banks lend to and borrow from each other.

Q: If legal reserve ratio is 21% Calculate Multiplier

A: According to the above given question, the values given are:- Legal reserve ratio = 21% = 0.21  We…

Q: Suppose that you deposit $8,000 in your bank and the required reserve ratio is 15 percent. The…

A:

Q: Use the money demand and money supply model to show graphically and explain the effect on interest…

A: The money demanded and the money supplied curves in the economy determines the interest rate and…

Q: Explain why the Reserve Demand is perfectly elastic at Interest on Reserve Balance (IORB).

A: The demand for reserves in the market is typically a regular downward sloping demand curve due to…

Q: With an initial depost of $1000 and a reserve requirement of 4%, what is the total amount of money…

A: here we calculate amount creation by multiplier which are as follow-  Multiplier is depend upon the…

Q: At any meeting of the Federal Open Market Committee, that committee's voting members consist of A B…

A: The U.S. central bank implements its monetary policy through the Federal Open Market Committee…

Q: During the holiday season, people generally increase their holding of currency. What defensive open…

A: The exchange rate is a key monetary variable that influences choices made by unfamiliar exchange…

Q: Assume that a bank has demand deposits of $25,000.  If the legal reserve requirement is 15% then the…

A: Demand deposits are a kind of checkable deposits that are checking accounts that pay no interest.…

Q: Discuss the structure and organization of the U.S. Federal Reserve

A: The Federal Reserve System is the national bank of the United States.  It performs five general…

Q: Calculate the multiplier in the Economy which has a legal reserve ratio of 22%

A: In an economy, legal reserve ratio is also known as required reserve ratio thate should be kept by…

Q: Find Multiplier given that the legal reserve ratio is 17.5%

A: The data presented in the question above is:- Legal reserve ratio = 17.5% = 0.175  Multiplier is to…

Q: borrowed reserves, and nonborrowed reserves, holding everything else constant, under the following…

A: The federal fund rate is the interest rate decided by the federal bank at which all banks are…

Q: What factors explain the rapid growth of internationalbanking?

A: International Banking refers to banking that has a presence across the international borders. It is…

Q: What types of regulations commercial banks are subject to and why commercial banks are subject to…

A: It is very important to have a strong and well developed banking sector in order to maintain…

Q: Explain why a bank manager and a bank regulator would likely view the timing at which a loan should…

A: The loan loss reserve is important for a bank's capital. A loan is vital for a bank's resources. To…

Q: Explain why the Reserve Supply is perfectly elastic at Discount Window

A: A central bank lending tool called the discount window was created to assist commercial banks in…

Q: Assume that the required reserve ratio is 20 percent. What is the maximum increase in money supply…

A: Reserve ratio = 20 % Increase in excess reserves = 50000 $ Money multiplier = 1 / reserve ratio = 1…

Q: 28) The Federal Open Market Committee consists of the seven members of the the president of the…

A: The federal open market committee is one of the committees formed by the fed.

Q: Suppose the Federal Reserve decided to sell $35 billion worth of government securities in the open…

A: Money multiplier:Money multiplier can be calculated as follows:

Q: Suppose that the central bank has increased the money supply such that there is an additional…

A: Reserve ratio:Every Commercial bank has to keep a fraction of deposits which they receive as the…

Q: Which statement(s) is/are TRUE? I. Increasing the reserve requirement would decrease the money…

A: Correct: I and III only

Q: What is the difference between a banks reserve ratio and target reserve ratio?

A: The money supply is the supply of currency in an economy. The rise in reserve ratio causes the fall…

Q: What is the main rationale behind paying negative interest rates to banks for keeping their deposits…

A: Negative interest rate on bank’s deposit’s mean to encourage banks to diversify their money for more…

Q: Explain the major functions of the Federal Reserve.

A: Federal Reserve is the central bank of US. It was established in order to provide flexible and…

Q: Which of the following is NOT true about the FederalReserve?a. It was established by the U.S.…

A: Central bank is that institution of a country which regulates the whole banking system in the…