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- If the monetary base is $1,000, the reserve-deposit ratio is 0.1 and the currency deposit ratio is 0.8, what is themoney multiplier?Answer Choices:a. 1.8b. 1.97c. 2.0d. 2.125. If the money multiplier is 4, the required reserve ratio is: 2%. 20%. 25%. 50%.Assuming initially that rr=10%, c=40%, and e=0, what would happen to the M1 money multiplier if there was an increase in rr to 15%.
- assume (i) Consumers spend $200 billion plus 80% of after-tax income, or C=200+0.8 Yd (ii) Investment demand varies inversely with the interest rate, such that I= 500-2000r (iii) Currently government spending and taxes are both $250 billion, or G=250 and Tx=250, (iv) The total money demand or liquidity preference schedule for this economy is an inverse function of the rate of interest and is given by the equation MD=850-1000r (v) The required reserve ratio for banks in this economy is 20%. No bank holds excess reserves, and everybody keeps their money in the bank. The total of reserves in the banks is $150 billion. Answer the following questions given the information above. a) The central bank wants national income to be $3000 billion. What must investment be for the equilibrium level of national income to be $3000 billion (if investment alone changes in response to the change in the interest rate)? b) At what interest rate is this level of investment (your answer to part (a))…Assume that a bank has on its asset side reserves of 1000 and loans of 6000 and on itsliability side deposits of 7000. Assume that the required reserve ratio is 10 percent.a. How much is the bank required to hold as reserves given its deposits of 7000?Assume that a bank has on its asset side reserves of 1000 and loans of 6000 and on its liability side deposits of 7000. Assume that the required reserve ratio is 10 percent. a. How much are its excess reserve.
- §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?Reserves, Deposits and the Money Multiplier If the money multiplier is 25, then the required reserve ratio (RR) is ________. (Round to the nearest tenth when appropriate.) Select one: A. 1.3% B. 4% C. 12.5% D. 25%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?
- (b) Examine the effect on money multiplier and money supply when there is a sharp increase in the currency ratio.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 depositsAssume 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.
