Answered: Suppose that the banking system of…

Macroeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506756

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter13: Money And The Banking System

Section: Chapter Questions

Problem 17CQ

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Suppose that the banking system of Upperland has excess reserves of $50 million, the desired reserve ratio is 25 percent, and the currency drain ratio is 50 percent. By how much will the quantity of money increase?

Select one:a. 100 million b. $50 million c. $12.5 million d. $25 million e. $37.5 million

Suppose that a country’s government expenditures are $400 billion, net taxes are $300 billion, saving is $300 billion, and investment is $250 billion. This country has a government budget

Select one: a. surplus and a private sector balance. b. surplus and a private sector surplus. c. deficit and a private sector surplus. d. surplus and a private sector deficit. e. deficit and a private sector deficit.

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

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