EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Question
Chapter 27, Problem 5IAPA
To determine
To calculate:
The deposits at bank included in M1, the deposits at bank included in M2, the value of loans of bank, securities and reserves.
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Students have asked these similar questions
A 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
$
The 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.
What amount of additional money supply can a bank system create if the required reserves rate is 10%, and deposits are $5 million?
Chapter 27 Solutions
EBK FOUNDATIONS OF ECONOMICS
Ch. 27 - Prob. 1SPPACh. 27 - Prob. 2SPPACh. 27 - Prob. 3SPPACh. 27 - Prob. 4SPPACh. 27 - Prob. 5SPPACh. 27 - Prob. 6SPPACh. 27 - Prob. 7SPPACh. 27 - Prob. 8SPPACh. 27 - Prob. 9SPPACh. 27 - Prob. 10SPPA
Ch. 27 - Prob. 11SPPACh. 27 - Prob. 12SPPACh. 27 - Prob. 13SPPACh. 27 - Prob. 1IAPACh. 27 - Prob. 2IAPACh. 27 - Prob. 3IAPACh. 27 - Prob. 4IAPACh. 27 - Prob. 5IAPACh. 27 - Prob. 6IAPACh. 27 - Prob. 7IAPACh. 27 - Prob. 8IAPACh. 27 - Prob. 9IAPACh. 27 - Prob. 10IAPACh. 27 - Prob. 11IAPACh. 27 - Prob. 1MCQCh. 27 - Prob. 2MCQCh. 27 - Prob. 3MCQCh. 27 - Prob. 4MCQCh. 27 - Prob. 5MCQCh. 27 - Prob. 6MCQCh. 27 - Prob. 7MCQCh. 27 - Prob. 8MCQ
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- If currency ratio is 0.10, required reserves ratio is 0.1, excess reserves ratio is 0.05, the Fed buys $300,000 in securities from the public and they withdraw 50 % of it in cash, what happens to reserves, the monetary base, and the money supply after the change has worked its way through the entire banking system? Use T-accounts to explain your answer.arrow_forwardA bank has $30,000 in deposits and has $5,400 in reserves. What is its reserve ratio?arrow_forwardThe Oxnard City Bank has reserves of $110 million and $150 million government bonds. The Oxnard City Bank has deposits of $800 million and owns $650 million loans. What is the value of the Oxnard City bank’s total assets in millions?arrow_forward
- I'm doing economics homework and the question is asking; If a bank has $150 million in deposits and $25 million in reserves with a reserve requirement of 0.15 how much are its required reserves. I thought I was supposed to multiply the reserve requirement with the total deposits, but its telling me my answer is incorrect. What am I doing wrong?arrow_forwardFind the amount of money that would be created in the banking system because of the money multiplier if the required reserve ratio is 14%, and a bank that had been holding $1,000 as excess reserves decides to loan all this money out.arrow_forwardThe table gives information about items on a bank's balance sheet. Calculate the bank's deposits that are part of M1, deposits that are part of M2, and the bank's loans, securities, and Item reserves. (millions of dollars) Checkable deposits Savings deposits Small time deposits 400 The bank's deposits that are part of M1 equal $ million. 500 720 The bank's deposits that are part of M2 equal $ million. Loans to businesses 950 Government securities 600 Currency 30 Reserves at the Fed 40 Enter your answer in the edit fields and then click Check Answer. 2 parts remaining Clear All Check Answer MacBook Air DII DD 80 888 F10 F11 F12 esc F4 F5 F6 F7 F8 F9 F1 F2 F3 ! @ 23 $ % & 1 2 4 6 7 { Y U P Q W E tab S D F G H K А caps lock > + I/ * 00arrow_forward
- Why 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_forwardThe Federal Reserve reported the following information about the money supply of the United States in October 2023: Monetary Series Reserves of depository institutions Currency in circulation Total checkable deposits Total savings deposits Small time deposits Retail Money Market Mutual Funds Monetary Base M1 Money Supply M2 Money Supply Value ($billions) $2,243.0 $4,981.8 $990.6 $1,654.2 $5,519.5 $20,725.6 a. Use the information in the table to find the values of Reserves of depository institutions, Total Savings deposits, and the M1 Money Supply.arrow_forwardYou take $500 that you held as currency and put it into the banking system. The reserve ratio is equal to 20%. Calculate the money multiplier. By how much will increase the total amount of deposits in the banking system? By how much will increase the money supply?arrow_forward
- Initial deposit ($100) The Money Multiplier Process Loan Loan University Bank Excess reserves: $25 Required reserves: $75 Deposit Bank #2 Deposit Excess reserves: $6.25 Required reserves: $18.75 How large a loan can Bank #2 in the figure above make? Instructions: Round your response to two decimal places. Bank #3 Loan Deposit Excess reserves: $1.56 Required reserves: $4.69 Bank #4 etc. Excess reserves: $0.39 Required reserves: $1.17arrow_forwardA bank's checkable deposits are $960, its loans are $857 and the bank has reserves of $103. If the bank faces a required reserve ratio of 9%, then what are the bank's current excess reserves?arrow_forwardQuestion The table below shows the components of M1 and M2 in the U.S. Use the table to calculate Total M1. Round to the nearest third decimal place. Provide your answer below: trillion Components of M1 and M2 in the U.S. Currency Traveler's checks Demand deposits and other checking accounts Savings accounts Time deposits Individual money market mutual fund balances $ trillions $1.2 $0.004 $2.204 $9.805 $0.527 $1.176arrow_forward
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