ᴀꜱꜱᴜᴍᴇ ᴛʜᴀᴛ ᴀ ᴛᴇxᴛɪʟᴇ ᴄᴏᴍᴘᴀɴʏ ɪɴᴄᴜʀꜱ ᴀ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ ᴄᴏꜱᴛ ᴏꜰ $12 ᴘᴇʀ ꜱʜɪʀᴛ, ᴀɴᴅ ɪᴛ ᴘʀᴏᴅᴜᴄᴇᴅ 3045 ᴜɴɪᴛꜱ ᴅᴜʀɪɴɢ ᴛʜᴇ ʟᴀꜱᴛ ᴍᴏɴᴛʜ. ᴛʜᴇ ᴄᴏᴍᴘᴀɴʏ ᴀʟꜱᴏ ᴘᴀʏꜱ ᴀ ʀᴇɴᴛ ᴏꜰ $11066 ᴘᴇʀ ᴍᴏɴᴛʜ. ᴡʜᴀᴛ ɪꜱ ᴛʜᴇ ᴛᴏᴛᴀʟ ᴄᴏꜱᴛ?
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ᴀꜱꜱᴜᴍᴇ ᴛʜᴀᴛ ᴀ ᴛᴇxᴛɪʟᴇ ᴄᴏᴍᴘᴀɴʏ ɪɴᴄᴜʀꜱ ᴀ ᴘʀᴏᴅᴜᴄᴛɪᴏɴ ᴄᴏꜱᴛ ᴏꜰ $12 ᴘᴇʀ ꜱʜɪʀᴛ, ᴀɴᴅ ɪᴛ ᴘʀᴏᴅᴜᴄᴇᴅ 3045 ᴜɴɪᴛꜱ ᴅᴜʀɪɴɢ ᴛʜᴇ ʟᴀꜱᴛ ᴍᴏɴᴛʜ. ᴛʜᴇ ᴄᴏᴍᴘᴀɴʏ ᴀʟꜱᴏ ᴘᴀʏꜱ ᴀ ʀᴇɴᴛ ᴏꜰ $11066 ᴘᴇʀ ᴍᴏɴᴛʜ. ᴡʜᴀᴛ ɪꜱ ᴛʜᴇ ᴛᴏᴛᴀʟ ᴄᴏꜱᴛ?
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- 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% LL 2.0% 1.5% 1.0% 0.5% 0.0% $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 $150 $160 Bank Excess Reserves ($Billion) The model of the federal funds market that we have learned is sometimes called the corridor model. This is because, in this model the equilibrium fed funds rate fluctuates between the discount rate and the interest on reserves. This gives the Fed a tool to control the fluctuations in the equilibrium fed funds rate. Let's see how. Assume that the supply of federal funds equals $70 billion. Suppose that currently the discount rate is 4.5 percent and the interest on reserves equals 1.5 percent. In this case, if demand for reserves increases by $40 billion dollars, the equilibrium fed funds rate will increase to percent, and if it decreases by $40 billion, the equilibrium fed funds rate will decrease to percent. Now suppose the Fed wants to reduce the fluctuations in the equilibrium fed funds rate. So it…7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% 3.5% 3.0% 2.5% LL 2.0% 1.5% 1.0% 0.5% 0.0% $0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 $110 $120 $130 $140 $150 $160 Bank Excess Reserves ($Billion) Consider the above graph that shows demand for excess reserves by the banking system as a whole. The discount rate is 4.5 percent and the Fed pays an interest of 1.50 percent on excess reserves. Currently banks as a whole are holding an excess reserve of $70 billion. This means that the equilibrium fed funds rate is 0.03 percent. Suppose that demand for excess reserves by the banking system increases by $20 billion (banks collectively want to hold $20 billion more excess reserves). In that case, the equilibrium fed funds rate will increase to 0.02 percent. Suppose that demand for excess reserves by the banking system increases by another $20 billion (now demand has increased by a total of $40 billion). In that case, the equilibrium fed funds rate will increase to 0.01 percent. Federal Funds RateMartin Shrood purchased a vacant lot outside of London for £13,500, because he heard that a shopping mall was going to be built on the other side of the road. He figured that he could make a bundle by puttingin a fast-food outlet on the site. As it turned out, the rumor was false. A sanitary landfill was located on the other side of the road, and Martin’s land was worthless. (£ denotes the British monetary unit, pounds sterling.)*Required: With respect to the economic characteristics of costs, what type of cost is the £13,500 that Martin paid for the vacant lot?
- Suppose First National Bank holds $100 million in assets with an average duration of 4 years, and it holds $85 million in liabilities with an average duration of 2 years. Further suppose there is a 4-percentage-point increase in interest rates. Calculate the percentage decrease in First National Bank's net worth relative to the total original asset value. A 4-percentage-point increase in interest rates decreases First National Bank's net worth by % of the total original asset value. (Round your response to two decimal places.)4. Money market instruments: Repurchase agreements Which of the following are typical repurchase agreement denominations? Check all that apply. $100,000 $7,500,000 $10,000,000 $100,000,000 Which of the following are characteristics of repurchase agreements? Check all that apply. Their maturities are normally between 1 and 15 days, 1 month, 3 months, or 6 months. The size of the repo market is approximately $5 trillion. Most repo transactions are backed by commercial paper or NCDs. There is no secondary market for repurchase agreements. Suppose Ginny initially purchased securities at a price of $49,050,000 while agreeing to sell them back to the original owner at a price of $50,000,000 at the end of a 3-month period. Assuming a 360 day year, the yield (or repo rate) on this repurchase agreement is: 7.44% 7,75% 7.98% 8.29%Round Deposits Required Reserves of 20% Excess Reserves New Loans None of loan proceeds are held as currency in circulation by people Loan proceeds redeposited 1 $500 $100 $400 $400 0 $400 2 $400 $80 $320 $320 0 $320 3 $320 $64 $256 $256 0 $256 4 $256 $51.20 $204.80 $204.80 0 $204.80 5 $204.80 $40.96 $163.84 $163.84 0 $163.84 6 $163.84 $32.77 $131.07 $131.07 0 $131.07 7 $131.07 $26.21 $104.86 $104.86 0 $104.86 8 $104.86 $20.97 $83.89 $83.89 0 $83.89 9 $83.89 $16.78 $67.11 $67.11 0 $67.11 10 $67.11 $13.42 $53.69 $53.69 0 $53.69 Totals $2231.57 $417.31 $1785.26 $1785.26 0 $1785.26 Calculate the new money supply. (Enter response here.) Calculate the money multiplier.
- H7. What are the key benefits to cryptocurrency for internal users (managers; investors) and external parties (regulators)?Round Deposits Required Reserves of 20% Excess Reserves New Loans 50% of loan proceeds are held as currency in circulation by people Loan proceeds redeposited 1 $500 $100.00 $400.00 $400.00 $200.00 $200.00 2 $200 $40 $160 $160 $80 $80 3 $80 $16 $64 $64 $32 $32 4 $32 $6.40 $25.60 $25.60 $12.80 $12.80 5 $12.80 $2.56 $10.24 $10.24 $5.12 $5.12 6 $5.12 $1.02 $4.10 $4.10 $2.05 $2.05 7 $2.05 $.41 $1.64 $1.64 $.82 $.82 8 $.82 $.16 $.66 $.66 $.33 $.33 9 $.33 $.07 $.26 $.26 $.13 $.13 10 $.13 $.03 $.10 $.10 $.05 $.05 Totals $833.25 $166.65 $666.60 $666.60 $333.30 $333.30 Calculate the new money supply. Calculate the money multiplier.Bastion owes Federioco $100 for the concert ticket that Federico purchased for him. Federico owes Delilah $100 because of a bet they made. If Federico writes on a piece of paper. "Bastion: Pay Delilah $100" and signs it, this would be considered a OA certificate of deposit OB. promissory note Oc check OD. nonnegotiable instrument OE draft
- 6. Use the following table to answer these questions: Y I G $20 $20 $20 $20 $20 $20 $ 500 $ 600 $ 700 $ 800 $ 900 $1,000 C $500 $590 $680 $770 $860 $950 $10 $10 $10 $10 $1Q $10 X $60 $40 $20 $0 -$20 -$40When Exxon Corporation decides to keep corporate records in terms of US dollars, they are using money as: a store of value O expander of economic activity a medium of exchange O a unit of account23 of 38 Choose the correct description for the following money market instrument. A repurchase agreement is: O A. an overnight loan between banks. o B. a debt instrument sold by a bank to depositors that pays annual interest of a given amount and at maturity pays back the original purchase price. O C. a short-term debt instrument issued by the Canadian government to cover immediate spending obligations. o D. a short-term money market instrument issued primarily by banks and funded from corporations and other banks through loans in which Treasury bills serve as collateral, with an explicit agreement to pay off the debt. Unsure