EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 33, Problem 1RQ
To determine
Calculation of fraction of the paper money.
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Students have asked these similar questions
Item Dollars
Checkable Deposits
Small Time Deposits
Currency
Money-Market Mutual Funds Held by
Businesses
Savings Deposits and Money-Market
Deposit Accounts
Money-Market Mutual Funds Held by
Individuals
In Billions
$600
$700
$500
$1,200
$2,500
$800
What is the size of the M1 money supply?
O $800
O $1,900
O $1,100
O $2,600
People in the economy have 350 billion CZK on current accounts, they have 250 billion CZK on saving accounts, people hold 200 billion CZK
in cash, commercial banks hold 100 billion CZK in cash and the central bank holds 50 billion CZK in cash. What is the money stock M1?
O 550 billion
O 700 billion
O 750 billion
O 600 billion
Refer to the table below.
Item Dollars
In Billions
Checkable Deposits
$600
Small Time Deposits
$700
Currency
$500
Money-Market Mutual Funds Held by Businesses
$1,200
Savings Deposits and Money-Market Deposit Accounts
$2,500
Money-Market Mutual Funds Held by Individuals
$800
What is the size of the M1 money supply?
O $800
O $2,600
O $1,900
O $1,100
Chapter 33 Solutions
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- Cash: $104.25 billion Checking deposits: $157.4 billion Saving accounts: $270.5 billion Small denomination time deposits: $20.3 billion Bank reserves held at the Fed: $33.0 billion Suppose that in a certain economy, the above are the only forms of money. How much M2 money is there? O a. $565.15 billion O b. $282.15 billion O c. $427.90 billion O d. $303.50 billion O e. $137.25 billion O f. $552.45 billionarrow_forwardSuppose that Cat nation has $125 million in money. There is only one bank in Cat nation and it holds 15% of the deposits as reserves. What is the money multiplier in this economy? O 6.67 20 O 12.67 10arrow_forwardIf r = 15%; Currency in circulation= 500 billion $; Checkable deposits = 1000 billion $; and excess reserves= 10 billion $; then the money multiplier is equal to..... O A. 0.70 O B. 0.80 O C. 0.90 O D. none of the abovearrow_forward
- The money supply is 2,000, of which 500 is currency held by the public. Bank reserves are 150. The reserve-deposit ratio equals: O a. 0.15 O b. 0.1 0.25 O d. 0.3 O e. 0.075arrow_forwardIf r= 10%; Currency in circulation= 400 billion $: Checkable deposits = 1000 billion $; then the money multiplier is equal to.... O A. 10 OB. 5.6 O C. 2.8 O D. 3.1arrow_forwardSuppose a banking system has a required reserve ratio of 10% and a $100,000 is deposited into the first bank in the system. What will be the immediate excess reserves for that first bank in the system and by how much can the total money supply in the system expand? $70,000; 700,000. O $100,000; $1,900,000. $90,000, $900,000. O $10,000; $100,000.arrow_forward
- Which of the following statements is true about bonds? 1) A bond's dollar price is calculated as a growth rate. 2) The dollar price and interest rate of a bond have a positive relationship. 3) Bonds can never default. 4) The dollar price and interest rate of a bond have an inverse relationship. 5) Bonds are ownership shares in a firm.arrow_forwardUsing the simply multiple deposit multiplier model, if the Federal Reserve Bank wants lending to increase by $4,500, and th required reserve ratio is 5%, how much do they need to increase reserves by? O 225 O 205 O 270 O 255arrow_forward0 Question 16 Suppose the following: • Smokey Bank has total deposits of $600,000. In addition, it currently has outstanding loans in the amount of $400,000 Finally, the required reserve ratio is 15%. . . What is the money multiplier? O 0.90 0.10 090 15 O 6.67arrow_forward
- Figure 30-3 On the following graph, MS represents the money supply and MD represents money demand. O 2.0. O 14.3. O 2.9. VALUE OF MONEY O 0.35. 0.35 MS, 8000 MS₂ Refer to Figure 30-3. Suppose the relevant money-supply curve is the one labeled MS₂; also suppose the economy's real GDP is 65,000 for the year. If the market for money is in equilibrium, then the velocity of money is approximately 13000 QUANTITY OF MONEY MDarrow_forwardNow, suppose the reserve ratio in the banking system changes to 20% and a $100,000 is deposited into the first bank in the system. What will be the immediate excess reserves for that first bank in the system and by how much can the total money supply in the system expand? O $100,000; $1,900,000. O $80,000; $400,000 $90,000; $900,000. O $10,000; $100,000.arrow_forwardIf Bank A has $3.8 million in total deposits, $860,000 in total reserves, and faces a 12 percent reserve requirement, the amount of money that Bank A could initially create by loaning out their excess reserves is: O $100,000. O $385,000 $404,000 O $756,800 O $3,366,667arrow_forward
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