If $50,000 is deposited in a bank operating in a banking system that has a reserve requirement of 10%, how much total money would be available to be loaned out by the entire banking system as a result of the banking multiplier? O a) $5,000 b) $50,000 c) $450,000 d) $500,000
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- Explanation it correctly Q)Assume that some people who receive bank loans do not deposit the full amount of the loan into a bank. This will cause the money multiplier to be the bank deposits multiplier. A) smaller than B) greater than C) neither greater than or smaller than D) the same asLet M subscript t denote the initial money supply. A friend of yours does not trust banks and keeps all his money in cash. He buys an old car for $20,000. The seller deposits the money in her checking account in Citibank. The bank keeps 10% of the deposit in reserve and lends the rest to Jack. Jack keeps $1,000 in cash and spends the remainder on NVIDIA stock. The seller of the stock, Jane, transfers the whole amount to her checking account in Wells Fargo. Wells Fargo keeps 20% of the amount in reserve and lends to rest to Joshua. Joshua keeps $1,600 in cash and spends the rest on treasury securities. The seller of the securities happens to be the Fed. A fire in Joshua's uninsured house destroys $600 of his cash. Let M subscript t plus 1 end subscript denote the resulting money supply. Calculate the change in the money supply, M subscript t plus 1 end subscript minus M subscript t.. Assume you are a project manager tasked with selected a new project for your firm. If the current market interest rate is 7%,what would be the last project undertaken? PROJECT RATE OF RETURN ON INVEST. COST OF INVEST. F 12% $6000 G 6% $300 H 9% $2000 I 9.5% $500 13. True or False. The actual money multiplier is equal to the ratio of the monetary base to the money supply. 23. Expansionary monetary policy __ interest rates and __ aggregate demand. increases; decreases increases; increases decreases; decreases decreases; increases ANSWER ALL PLEASE
- Suppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 5%. Sean, a Southeast Mutual Bank customer, deposits $200,000 into his checking account at the local branch.Change in Required Reserves(Dollars)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.Which of the following factors pose a limit on the ability of commercial banks to increase the quantity of money in circulation by extending new loans? Select one or more: a. the quantity of Central Bank reserves that they own b. the quantity of money that savers lent to them by opening deposits c. the behavior of households and firms, which reduce the quantity of money in circulation by repaying previous loans. d. the availability of profitable lending opportunities in the economy e. the willingness of household and firms to take up new debts at the given interest rate
- 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…You are the bank's liquidity manager. If the liquidation cost of highly non-liquid assets decreases, the risk of illiquidity [A] and the cost of illiquidity [B]. Therefore, it you can [C] the ESF buffer. As a result, your bank will provide [D] liquidity transformation for society. C and D are increase, the same decrease, the same increase, less decrease, moreThe required reserve ratio is 10 percent, but banks actually keep 20 percent on reserve. The actual money multiplier will be a. 10. b. 9. c. 5. d. 2. e. 1.
- Assume that the commercial banking system has 500TL of deposits and the banks hold no excess reserves. The required reserve ratio is 10%. If the Central Bank sells T-bills in the amount of 25TL and banks lend to the maximum extent permitted, assuming no cash drain, loans: a.decrease by 225TL b.decreases by 20TL c.decrease by 100TL d.increase by 25TL e.decrease by 25If a bank has excess reserves of R4,000 and demand deposit liabilities of R100,000, and if the reserve requirement is 15 percent, then the bank has actual reserves of A) R17,000. B) R19,000. C) R24,000. D) R29,000.Which of the following assumptions is necessary for the money multiplier (m) to be used in the equation D=E×m (where D stands for the maximum checkable-deposit creation and E is the initial change in excess reserves)? A. People's marginal propensity to consume does not rise with income. B. Borrowers use the entire loan amount to pay others, who will deposit all of the funds in a checking account. C. Borrower default rates are stable.