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Bundle: Macroeconomics, 13th + Aplia, 1 Term Printed Access Card
13th Edition
ISBN: 9781337742375
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 13.3, Problem 3ST
To determine
The changes in the banking system.
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How to figure out the banks' excess reserves.
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Chapter 13 Solutions
Bundle: Macroeconomics, 13th + Aplia, 1 Term Printed Access Card
Ch. 13.1 - Prob. 1STCh. 13.1 - Prob. 2STCh. 13.1 - Prob. 3STCh. 13.3 - Prob. 1STCh. 13.3 - Prob. 2STCh. 13.3 - Prob. 3STCh. 13.3 - Prob. 4STCh. 13 - Prob. 1QPCh. 13 - Prob. 2QPCh. 13 - Prob. 3QP
Ch. 13 - Prob. 4QPCh. 13 - Prob. 5QPCh. 13 - Prob. 6QPCh. 13 - Prob. 7QPCh. 13 - Prob. 8QPCh. 13 - Prob. 9QPCh. 13 - Prob. 10QPCh. 13 - Prob. 11QPCh. 13 - Prob. 12QPCh. 13 - Prob. 1WNGCh. 13 - Prob. 2WNGCh. 13 - Prob. 3WNGCh. 13 - Prob. 4WNGCh. 13 - Prob. 5WNGCh. 13 - Prob. 6WNGCh. 13 - Prob. 7WNGCh. 13 - Prob. 8WNGCh. 13 - Prob. 9WNGCh. 13 - Prob. 10WNG
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- If bank A borrows $10 million from bank B, what happens to the reserves in bank A? In the banking system? Please explain.arrow_forwardHow is a bank able to lend more money than it has in reserves?arrow_forwardThe First National Bank of Townville has $125,000 in U.S. government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000. What is the amount of its reserves? Show your calculations.arrow_forward
- Why don’t banks hold 100 percent reserves? How is the amount of reserves banks hold related to the amount of money the banking system creates?arrow_forwardThe reserve requirement is the amount of money a bank must hold onto? True or Falsearrow_forwardAre commercial bank savings accounts part of the monetary reserve?arrow_forward
- The task I am struggling with: Tracy Williams deposits $500 that was in her sock drawer into a checking account at the local bank. The reserve ratio is 10%. a) how dies the deposit initially change the T-account of the local bank? How does it change the money supply? b) If the bank maintains a reserve ratio of 10%, how will it respond to the new deposit? c) if every time the bank makes a loan, the loan results in a new checkable bank deposit in a different bank equal to the amount of the loan, by how much could the total money supply in the economy expand in response to Tracy´s initial cash deposit of $500? Thank you very much for your help.arrow_forwardWhy don’t banks hold a 100 percent reserves? How is the amount of reserves bank hold related to the amount of money the banking system creates?arrow_forwardWhy can banks continue to hold reserves that are only a fraction of the demand deposits of their customers? Is your money safe in a bank? Why or why not?arrow_forward
- Your friend Sarah borrows money from her bank to buy a car. Explain to her the transactions in which the bank sets up the loan, and why the loan involves an increase in the money supply.arrow_forwardA bank has the following deposits and​ assets:  Checkable deposits held by individuals and​ businesses, ​$380   Savings deposits held by individuals and​ businesses, ​$1,280 Small time​ deposits, ​$575 Loans to​ businesses, ​$1,809 Outstanding credit card​ balances, ​$300 Government​ securities, ​$125 Currency in the​ bank's vault, ​$1 Reserve account at the​ Fed, ​$8  Calculate the​ bank's total​ deposits, deposits that are part of​ M1, and deposits that are part of M2. The​ bank's total deposits are ​$ Deposits that are part of M1 are ​$ Deposits that are part of M2 are ​$arrow_forwardWhat amount of additional money supply can a bank system create if the required reserves rate is 10%, and deposits are $5 million?arrow_forward
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