9 The table below provides data for a hypothetical economy.Total value of corporate sharesCurrency outside chartered banksChequable notice deposits at chartered banksPublicly held demand deposits at chartered banksFederal government bondsOther liquid assets included in M2+Nonpersonal term and foreign-currency deposits at chartered banksPersonal term deposits at chartered banksNon-chequable notice deposits at chartered banksChequable no ce deposits at near banksPersonal term deposits at near banksNon-chequable notice deposits at near banksBased on this data:a. M1+ is $ 278 billion.b. M2 is $c. M3 is $d. M2+ is $billion.billion.billion.h$500 billion$42 billion$102 billion$45 billion$637 billion$32 billion$268 billion.$134 billion$94 billion$89 billion$114 billion$74 billion

M1, M2, and M3 are estimations of the money supply, known as the money totals. M1 remembers cash for…

The table below provides data for a hypothetical economy. Total value of corporate shares Currency outside chartered banks Chequable notice deposits at chartered banks Publicly held demand deposits at chartered banks Federal government bonds Other liquid assets included in M2+ Nonpersonal term and foreign-currency deposits at chartered banks Personal term deposits at chartered banks Non cheguabla $500 billion $42 billion $102 billion $45 billion $637 billion $32 billion $268 billion. $134 billion

The table below provides data for a hypothetical economy. Total value of corporate shares Currency outside chartered banks Chequable notice deposits at chartered banks Publicly held demand deposits at chartered banks Federal government bonds Other liquid assets included in M2+ Nonpersonal term and foreign-currency deposits at chartered banks Personal term deposits at chartered banks Non cheguabla $500 billion $42 billion $102 billion $45 billion $637 billion $32 billion $268 billion. $134 billion

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter15: Money Creation

Section: Chapter Questions

Problem 17SQ

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Right now, the Federal Reserve is trying to reduce its balance sheet by making open marketsales. Use the market for reserves supply and demand model to show what would happen to thefederal funds rate, non-borrowed reserves, and borrowed reserves. (Assume that in the initialequilibrium, the downward-sloping part of the demand curve intersects the vertical part of thesupply curve. Be sure to label your graph and clearly state what happens to the federal fundsrate, borrowed reserves, and non-borrowed reserves.)b) Now, let's suppose that the Federal Reserve doesn't want to change the federal funds rate andwants to counteract the policy explained in the previous graph. What can the Federal Reserve doto keep the federal funds rate at its initial value (before the open market sale)? Clearly state apolicy different from open market operations to achieve this
Assume that the following asset values (in millions of dollars) exist in Ironmania: Federal Reserve Notes in circulation = $700; Money market mutual funds (MMMFs) held by individuals = $400; Corporate bonds = $300; Iron ore deposits = $50; Currency in commercial banks = $100; Savings deposits, including money market deposit accounts (MMDAs) = $140; Checkable deposits = $1500; Small-denominated (less than $100,000) time deposits = $100; Coins in circulation = $40. Recall, M1 equals Federal Reserve Notes in circulation plus checkable deposits plus Coins in circulation. M2 equals M1 plus Savings deposits, including Money market deposit accounts (MMDAs) plus Small-denominated (less than $100,000) time deposits plus Money Market Mutual Funds (MMMFs) held by individuals. 1.1 What is M1 in Ironmania? 1.2. What is M2 in Ironmania?
Assume that the following asset values (in millions of dollars) exist in Ironmania: Federal Reserve Notes in circulation = $700; Money market mutual funds (MMMFs) held by individuals = $400; Corporate bonds = $300; Iron ore deposits = $50; Currency in commercial banks = $100; Savings deposits, including money market deposit accounts (MMDAs) = $140; Checkable deposits = $1500; Small-denominated (less than $100,000) time deposits = $100; Coins in circulation = $40. Recall, M1 equals Federal Reserve Notes in circulation plus checkable deposits plus Coins in circulation. M2 equals M1 plus Savings deposits, including Money market deposit accounts (MMDAs) plus Small-denominated (less than $100,000) time deposits plus Money Market Mutual Funds (MMMFs) held by individuals. 1.1. What is M1 in Ironmania? Show your computation. 1.2. What is M2 in Ironmania? Show your computation.
Which of the following factors pose a limit on the ability of commercial banks to increase the quantity of money in circulation by extending new loans? Select one or more: a. the quantity of Central Bank reserves that they own b. the quantity of money that savers lent to them by opening deposits c. the behavior of households and firms, which reduce the quantity of money in circulation by repaying previous loans. d. the availability of profitable lending opportunities in the economy e. the willingness of household and firms to take up new debts at the given interest rate
Assume that the following asset values (in millions of dollars) exist in Ironmania: Federal Reserve Notes in circulation = $700; Money market mutual funds (MMMFs) held by individuals = $400; Corporate bonds = $300; Iron ore deposits = $50; Currency in commercial banks = $100; Savings deposits, including money market deposit accounts (MMDAs) = $140; Checkable deposits = $1500; Small-denominated (less than $100,000) time deposits = $100; Coins in circulation = $40. Hints: Recall, M1 equals Federal Reserve Notes in circulation plus checkable deposits plus Coins in circulation. M2 equals M1 plus Savings deposits, including Money market deposit accounts (MMDAs) plus Small-denominated (less than $100,000) time deposits plus Money Market Mutual Funds (MMMFs) held by individuals. Part 1:What is M1 in Ironmania? Part 2: What is M2 in Ironmania?
A group of college friends decide to start their own bank, LSU Community Bank, in rural Pennsylvania. In order to get started they put in a total of $10 million of their own money and borrow $40 million from a venture debt lender. (This is known as venture debt lending.) They accept $160 million in deposits from households and businesses in the community, and, in turn, make $90 million in loans. They also purchase $95 million of mortgage-backed securities and keep the remainder of their assets as reserves at the Philadelphia Federal Reserve District Bank. a. Show LSU Community Bank's balance sheet. b. What is LSU Community Bank's reserve-deposit ratio? c. What is LSU Community Bank's asset to equity ratio?
A group of college friends decide to start their own bank, LSU Community Bank, in rural Pennsylvania. In order to get started they put in a total of $10 million of their own money and borrow $40 million from a venture debt lender. (This is known as venture debt lending.) They accept $ 160 million in deposits from households and businesses in the community, and, in turn, make $ 90 million in loans. They also purchase $ 95 million of mortgage-backed securities and keep the remainder of their assets as reserves at the Philadelphia Federal Reserve District Bank. a. Show LSU Community Bank's balance sheet. b. What is LSU Community Bank's reserve-deposit ratio? C. What is LSU Community Bank's asset to equity ratio? d. Suppose the housing market tanks and the market value of the bank's mortgage-backed securities falls by 10%. i. Show LSU Community Bank's new balance sheet. ii. By what percentage does the value of the bank's assets fall? iii. By what percentage does the value of the bank's…
Label each of the following statements true, false, or uncertain. Explain briefly.a) The term investment, as used by economists, refers to the purchase of bonds andshares of stock b) The central bank can increase the supply of money by selling bonds in the marketfor c) Bond prices and interest rates always move in opposite directions. d) If government spending and taxes increase by the same amount, the IS curve doesnot shift. e) When banks hold only a fraction of deposits in reserve, banks create money. At theend of this process of money creation, the economy is more liquid in the sense that thereis more of the medium of exchange, and the economy is wealthier than before.
The equilibrium rate of interest in the market for money is determined by the intersection of the A) supply-of-money curve and the asset-demand-for-money curve. B) supply-of-money curve and the transactions-demand-for-money curve. C) supply-of-money curve and the total-demand-for-money curve. D) investment-demand curve and the total-demand-for-money curve.
To understand the important role played by banks in the economy, we need to imagine a world without banks. REQUIRED: A. Explain how economic transactions between household savers of funds and corporate users of funds would occur in a world without financial intermediaries. Identify and explain three economic disincentives that probably would dampen the flow of funds between household savers of funds and corporate users of funds in an economic world without financial intermediaries. Identify and explain the two functions in which FIs may specialize that would enable the smooth flow of funds from household savers to corporate users. In what sense are the financial claims of FIs considered secondary securities, while the financial claims of commercial corporations are considered primary securities?
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?
Illustrate and explain what is meant by a liquidity trap, and analyse how the 2007/8 financial crisis may have pushed many rich countries into this situation. What factors led to a gradual recovery?