In order to find the subgame perfect Nash equilibrium of the whole game first focus on the subgame that startswith investor 1's second decision node:1NotWithdraw2WithdrawNot Withdraw,152010151020Which is a pure strategy Nash equilibrium of this subgame?a) (Withdraw, Withdraw)b) (Withdraw, Not)c) (Not, Withdraw)Od) (Not, Not)Not1515 4.●There are 2 investors. Each has deposited $10 in the same bank.The bank invested both deposits in a single long-term project.If the bank wants to end the project before its completion, a total of $12 can be recovered (out of the $20invested).If the bank waits until the project is completed, it will receive a total of $30.Investors can withdraw money from their bank accounts at only 2 periods: before the project is completedand after.The extensive from representation of the game between both investors is depicted below:WithdrawNot2Not WithdrawNot1021210WithdrawWithdraw15Withdraw662Not Withdraw2010NotNot15

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In order to find the subgame perfect Nash equilibrium of the whole game first focus on the subgame that starts with investor 1's second decision node: Not Withdraw 2 Withdraw Not Withdraw 15 20 10 15 10 20 Which is a pure strategy Nash equilibrium of this subgame? a) (Withdraw, Withdraw) b) (Withdraw, Not) c) (Not, Withdraw) d) (Not, Not) Not 15 15

In order to find the subgame perfect Nash equilibrium of the whole game first focus on the subgame that starts with investor 1's second decision node: Not Withdraw 2 Withdraw Not Withdraw 15 20 10 15 10 20 Which is a pure strategy Nash equilibrium of this subgame? a) (Withdraw, Withdraw) b) (Withdraw, Not) c) (Not, Withdraw) d) (Not, Not) Not 15 15

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter25: Money, Banking, And The Federal Reserve System

Section: Chapter Questions

Problem 13P

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In a program of deposit insurance as it is operated in the United States, what is being insured and who pays the insurance premiums?
§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?
In an economy ‘a la Diamond and Dybvig (1983)1 where the long-term investment has a return of R = 2.25, and the bank offers r1 = 1.25 for early withdrawals or r2 = 1.947 for late withdrawals, would 58% of depositors withdrawing in the first period generate a bank run? a. Yes b. Yes, but only if late depositors would earn a return less than r2 c. No d. Yes, but only if there is deposit insurance in place
Suppose that the Federal Reserve (the "Fed") buys $1.5 million of bonds from a bond dealer, who immediately deposits the funds in her checking account. What is the initial impact of this transaction? A. The banking system's holdings of securities rise by $1.5 million, and the banking system's total reserves fall by $1.5 million. B. Checkable deposits rise by $1.5 million, and the banking system's holdings of securities rise by $1.5 million. C. Checkable deposits rise by $1.5 million, and the banking system's total reserves rise by $1.5 million. D. The banking system's holdings of securities fall by $1.5 million, and the banking system's total reserves rise by $1.5 million.
Which function of money is in each of the following cases demonstrating? (1) You pay $10 for a movie ticket. (2) You deposit your tax refund check in your saving account. (3) A restaurant manager sets the prices of meals she serves in dollars. (4) A restaurant manager places the day's receipts in the safe. (5) McDonald's announces that a Big-Mac now costs only $1.00. (6) Bill Gates has a net worth of $50 billion.
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The table below reports the breakdown of assets and liabilities for all commercial banks for January 2020, two months before the start of the COVID-19 recession, and December 2020. Assets (in billions of dollars) Liabilities (in billions of dollars) Jan-20 Dec-20 Jan-20 Dec-20 Loans $10,041.54 $10,376.47 Deposits $13,293.30 $16,061.82 Reserves $1,768.52 $3,168.94 Borrowings $1,965.90 $1,715.81 Treasury Securities $3,008.19 $3,726.10 Other Liabilities $593.42 $825.74 Other Assets $2,984.52 $3,224.45 Total Assets $17,802.77 $20,495.96 Total Liabilties $17,802.77 $20,495.96 From January to December, the net worth of banks changed by $___ billion (round your answer to two decimal places).
1 Which of the following is a component of money? a) bonds b) saving c) income d) stocks e) none of the above 2 Which of the following will increase the amount of moeny one wishes to hold? a) an increase in the interest rate increase b) a reduction in the interest rate increase c) a reduction in income d) none of the above 1.5 At the current interest rate, suppose the supply of money is less than the demand for money. Given this information, we know that: a) the price of bonds will tend increase. b) the price of bonds will tend to fall. c) production equals demand. d) the goods market is in equilibrium.
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?
Suppose that the bank holds $15m of treasury bonds, $10m of reserves, $30m of checkable deposits, $20 of time deposits and has $6m of capital. How much loan does the bank have if we know it doesn't have any other assets or liabilities Suppose in the same bank checkable deposits and reserves pay 0 interest. The interest rate on treasuries is 3%, loans pay 7% and time deposits pay 5%. How much profit does the bank make?
Suppose that the bank holds $15m of treasury bonds, $10m of reserves, $30m of checkable deposits, $20 of time deposits and has $6m of capital. How much loan does the bank have if we know it doesn't have any other assets or liabilities Suppose in the same bank checkable deposits and reserves pay 0 interest. The interest rate on treasuries is 3%, loans pay 7% and time deposits pay 5%. How much profit does the bank make? What is the banks return on assets?