Suppose your mom sends you $500 for your birthday and you deposit it in your chequing account. The reserve ratio is 10%. If the bank decides to loan out the excess, based on this deposit the bank's loans have increased by and the bank's chequable deposits have increased by Select one: a. $50; $450 b. $450; $500 c. $50; $500 d. $500; $50

Suppose your mom sends you $500 for your birthday and you deposit it in your chequing account. The reserve ratio is 10%. If the bank decides to loan out the excess, based on this deposit the bank's loans have increased by and the bank's chequable deposits have increased by Select one: a. $50; $450 b. $450; $500 c. $50; $500 d. $500; $50

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that the bank holds $15m of treasury bonds, $10m of reserves, $30m of checkable deposits, $20m 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 not listed here? Suppose that checkable deposits and reservers pay 0 interest The interest rate on treasuries is 3% Loans pay 7% and time deposits pay 5% How much profits does the bank make? What is the bank's return on assets?
Give only typing answer with explanation and conclusion If a bank expects interest rates to go up in six months and it currently has a negative rate-sensitive six-month gap (RSA - RSL), what actions should it take, if any, to preserve or increase its net interest income (NII)?
(M/P)d = 1,000 − 100r,M = 1000P = 2.a) Graph the supply and demand for real money balances.b) What is the equilibrium interest rate?c) Assume that the price level is fixed. What happens to the equilibrium interest rate if the supply ofmoney is raised from 1,000 to 1,200?d) If the Central Bank wishes to raise the interest rate to 7 percent, what money supply should it set?
Let: C = consumption I = investment spending G = government spending Tx = tax revenue Yd= after-tax income MS = money supply MD = money demand r = interest rateAssume for a given closed economy:(i) Consumers spend $200 billion plus 80% of after-tax income, orC=200+0.8 Yd(ii) Investment demand varies inversely with the interest rate, such thatI= 500-2000r(iii) Currently government spending and taxes are both $250 billion, orG=250 and Tx=250,(iv) The total money demand or liquidity preference schedule for this economy is an inversefunction of the rate of interest and is given by the equationMD=850-1000r(v) The required reserve ratio for banks in this economy is 20%. No bank holds excessreserves, 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.d) The central bank wants national income to be $3000 billion. What must investment befor the equilibrium level of national income to be $3000…
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