Mira deposited $10,000 in a saving accountat “B" bank on September 2018. OnNovember 2018 she withdrew the wholeamount and deposited $9,000 in a checkingaccount at "S" bank and kept $1,000 in herwallet. Determine M1 and M2 on November2018. *M1= $10,000; M2= $10,000M1= 1,000; M2=0M1= 9,000; M2=9,000M1=10,000; M2= 0If excess reserves are $40,000, demanddeposits are $1,000,000, and the requiredreserve ratio is 10%, then actual reserve are:$40,000O $100,000$140,000$200,000

M1 = Checking account + Currency = 9000 + 1000 = 10000 M2 = M1 + Saving account = 10000 + 0 = 10000…

Mira deposited $10,000 in a saving account at “B" bank on September 2018. On November 2018 she withdrew the whole amount and deposited $9,000 in a checking account at "S" bank and kept $1,000 in her wallet. Determine M1 and M2 on November 2018. *

Mira deposited $10,000 in a saving account at “B" bank on September 2018. On November 2018 she withdrew the whole amount and deposited $9,000 in a checking account at "S" bank and kept $1,000 in her wallet. Determine M1 and M2 on November 2018. *

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter12: Money, Banking And The Financial System

Section12.3: How Banking Developed

Problem 3ST

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Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

Mira deposited $10,000 in a saving account
at “B" bank on September 2018. On
November 2018 she withdrew the whole
amount and deposited $9,000 in a checking
account at "S" bank and kept $1,000 in her
wallet. Determine M1 and M2 on November
2018. *
M1= $10,000; M2= $10,000
M1= 1,000; M2=0
M1= 9,000; M2=9,000
M1=10,000; M2= 0
If excess reserves are $40,000, demand
deposits are $1,000,000, and the required
reserve ratio is 10%, then actual reserve are:
$40,000
O $100,000
$140,000
$200,000

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