The reserve requirement is 25%, and the banking system receives a new $1,000 deposit. The bank does not want to hold excess reserves and the public does not want to hold any currency. By how much will the Money Supply ultimately rise? $6000 $3000 $5000 $4000
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- Commercial banks have a target reserve ratio of 30 percent and there is a cash drain of 20 percent. If the Central Bank issues an additional 12 dollars of currency the money supply will increase by _____________ dollars.Humongous Bank is the only bank in the economy. The people in this economy have $20 million in money, and they deposit all their money in Humongous Bank (show all work and calculations). Humongous Bank is required to hold 5% of its existing $20 million as reserves, and to loan out the rest. What the amount of the required reserves? Assume no loans have been made, how many loans can be made now? What is the money multiplier? Assume that Humongous bank is part of a multibank system. If all money is loaned out, how much can the money supply increase?Suppose you win on a scratch-off lottery ticket and you decide to put all of your $2,500 winnings in the bank. The reserve requirement is 10%. What is the maximum possible increase in the money supply as a result of your bank deposit? maximum increase: $ Which events could cause the increase in the money supply to be less than its potential? All money loaned out is deposited back into the banking system. Banks choose to loan out all excess reserves. SEL Some loan recipients choose to hold some cash instead of depositing all of it in banks. Banks decide to keep some excess reserves on hand. C Z MODE PAYLA I topm PEDRULESTAN SVETE D P Activate Windows Salto Settings to activate Windows
- When currency is equal to $100 billion and reserves are equal to $200 billion, and we know that the money multiplier is equal to 2.5, then the money supply will be equal toBank reserves increase by $5,000 when the RRR is 15%. The banks initially hold an additional 1% as excess reserves but then lend out all excess reserves so that the actual reserves are equal to the required reserves. By how much does the money supply increase when the banks change from 1% to 0% excess reserves?If the high-powered money (H) is RM100 billion, how much is the money supply in this economy?
- Suppose that Rina makes a new cash deposit of $85,000 at her bank. Suppose that the bank is required only to keep new cash reserves equal to 25%. Then the maximum amount Rina's deposit will money supply is $ increase the decrease Which of the following assumptions must hold to ensure that the money creation process initiated by Rina's deposit reaches its potential? Check all that apply. Some borrowers cash the newly acquired funds. At least one bank in the banking system is conservative enough to keep some of its newly acquired cash deposits in its vault. All borrowers quickly spend all of their newly acquired funds. All banks in the banking system lend all of their excess reserves.Currency in Circulation (October 2020) 40.5 billion Nigerian currency Reserves (October 2020) 34.2 billion Nigeriancurrency M1 (October 2020) 2,465.9 billion Nigeriancurrency M2 (October 2020) 2,638.8 billion Nigeriancurrency Calculate the size of the actual money (M2) multiplier in October 2020. Round your answer to one decimal place. Nigeria's central bank, N. Bank, has not set a required reserve ratio (you can treat the required reserve ratio as 0%). Calcuate the excess reserve ratio for Norway in October 2020. Enter your answer in percent form without the percent sign. Round to one decimal place.You take $300 you had kept under your mattress and deposit it in your bank account. Suppose this $300 stays in the banking system as reserves and banks hold reserves equal to 15 percent of deposits. The total amount of deposits in the banking system increases by $ supply increases by $. and the money
- A hypothetical economy is having currency in circulation of $100m, and deposits of $400m. Assume that required reserves are $40m and excess reserves are 60m a) Calculate the monetary base. How much is the money supply? b) Calculate the effect on the money supply of a decrease of currency in circulation by $40m c) What would the central bank do to offset the effects of the decrease in the currency in circulation by $40m?Assume that the banking system has total reserves of Rs.250 billion. Assume also that required reserves are 10 percent of checking deposits and that banks hold no excess reserves and households hold no currency. The amount of money supply will decline to?Question 1. A country’s money supply equals 300 bln USD, nominal GDP equals 3000 bln USD, and real GDP – 1500 bln USD in 2018. Calculate the price level and the velocity of money. Assume output increases by 10% next year. Determine what money supply should the central bank of this country set next year in order to keep the prices stable. Discuss what can happen if the growth of a country's money supply is faster than the growth of its output. Use the quantity theory of money to support your statement.
