If the required reserve ratio is 20%; excess reserves= 0; and individuals prefer to keep checking deposits than holding cash; then a deposit of 100 B.D will lead to an increase in the total amount of loans equal to.. .B.D. O A. 300 О В. 400 OC. 500 O D. none of the above

If the required reserve ratio is 20%; excess reserves= 0; and individuals prefer to keep checking deposits than holding cash; then a deposit of 100 B.D will lead to an increase in the total amount of loans equal to.. .B.D. O A. 300 О В. 400 OC. 500 O D. none of the above

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter29: The Monetary System

Section: Chapter Questions

Problem 3QCMC

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Suppose that National bank has $36 million in checkable deposits, Commonwealth bank has $45 million in checkable deposits and the required reserve ratio for checkable deposits is 10%. If the National bank has $4 million in reserves and Commonwealth has $5 million iin reserves, how much excess reserves does each bank have? Suppose that a customer of the National bank writies a check for $2 million to a real estate broker who deposits the check at Commonwealth bank. After the check clears, how much excess reserves does each bank have?
a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent.b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not? c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum ncrease in the money supply be what you found it to be in part a)? Why or why not?
a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent.b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not?c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum increase in the money supply be what you found it to be in part a)? Why or why not?
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.
The difference between M1 and M2 is given bywhich of the following?a. M1 includes currency, coins, gold, and silver,whereas M2 does not contain gold and silver.b. M1 is made up of currency and checkabledeposits, whereas M2 contains M1 plus savingsdeposits and small time deposits.c. M1 is limited to checkable deposits, whereasM2 contains currency.d. M1 includes only currency, whereas M2contains M1 plus checkable deposits.
In Westlandia, the public holds 50% of M1 in the form of currency, and the required reserve ratio is 20%. Estimate how much the money supply will increase in response to a new cash deposit of $500 by completing the accompanying table. (Hint: The first row shows that the bank must hold $100in minimum reserves – 20% f the $500 deposit – against this deposit, leaving $400 in excess reserves that can be loaned out. However, since the public wants to hold 50% of the loan in currency, only $400 x 0.5 = $200 of the loan will be deposited in round 2 from the loan granted in round 1). How does your answer compare to an economy in which the total amount of the loan is deposited in the banking system and the public doesn’t hold any of the loan in currency? What does this imply about the relationship between the public´s deisre for holding currency and the money multiplier? Thank you very much for your help.
§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?
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
A friend of yours produces 7,000 counterfeit one-dollar bills. Assume that the bills are undetectable with current technology and that the required reserve ratio is 20%. (a) What would be the maximum increase in the money supply? (b) Give two reasons as to why the actual increase in the money supply may be smaller than your answer to (a).
Pls help with the below multiple-type question, Select the correct option and explain it. Why are notice deposits not included in the M1 definition of money? a.Because the real value of notice deposits is zero. b.Because the value of notice deposits is much less stable than that of demand deposits and currency. c.Because they do not have direct or immediate access to goods and services. d.Because they are not recognized in law as legal tender. e.Because in terms of volume they are much less than demand deposits
1. a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent. b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not? c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum increase in the money supply be what you found it to be in part a)? Why or why not? 2. a) Suppose growth rate of Real GDP is 6% and the growth rate of velocity is 3%. If Bangladesh Bank wants to have a 5 %…
Suppose The Central Bank Sets The Reserve Requirement Ratio At 5%. The Maximum The Central Bank Is Willing To Lend Is 25% Of Required Reserves, Charging The Gross Real Rate Of Return Of 1. We Assume The Gross Real Rate Of Return On Fiat Money Is 1.02 And The Gross Real Return On Capital Is 1.08. a) What is the gross real return on deposits? b) If the supply of fiat money is $10,000, what is the quantity of M1 in this economy?