The table below is the balance sheet for all the banks combined in the banking system. Assets Liabilities/Equity Demand deposits Shareholders' equity Reserves $12,500 $ 125,000 Loans 112,500 12,500 Securities 7,500 Fixed assets 5,000 Total $137,500 Total $137,500 a. Which one of the above figures is part of the money supply? Demand deposits v worth $ 125000 are included in money supply. b. If all banks maintain 100% reserves, what happens to the money supply if $300 cash is deposited into one of the banks in the system? Money supply would (Click to select) v c. If none of the banks maintain reserves, what happens to the money supply if $300 cash is deposited into one of the banks in the system? Money supply would (Click to select)

The table below is the balance sheet for all the banks combined in the banking system. Assets Liabilities/Equity Demand deposits Shareholders' equity Reserves $12,500 $ 125,000 Loans 112,500 12,500 Securities 7,500 Fixed assets 5,000 Total $137,500 Total $137,500 a. Which one of the above figures is part of the money supply? Demand deposits v worth $ 125000 are included in money supply. b. If all banks maintain 100% reserves, what happens to the money supply if $300 cash is deposited into one of the banks in the system? Money supply would (Click to select) v c. If none of the banks maintain reserves, what happens to the money supply if $300 cash is deposited into one of the banks in the system? Money supply would (Click to select)

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.3P

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