If all the commercial banks in a national economy operated in a cash reserve ratio of 20%, how much cash would have to be deposited with the banks for the money supply to increase by $300million?
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}If all the commercial banks in a national economy operated in a cash reserve ratio of 20%, how much cash would have to be deposited with the banks for the money supply to increase by $300million?
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- “Whenever currency is deposited in a commercial bank, cash goes out of circulation and, as a result, the supply of money is reduced.” Do you agree? Explain why or why not.Assuming a reserve requirement of 20%, if the central bank of a country injects an additional $10,000 in reserves into the banking system, how much new money can the banking system create?How would a decrease in the reserve requirement affect the (a) size of the money multiplier, (b) amount of excess reserves in the banking system, and (c) extent to which the system could expand the money supply through the creation of checkable deposits via loans?
- Assume that bank deposits are $3,200 billion, the required reserve ratio is 10%, and currency outstanding is $400 billion. What can the central bank do to decrease the money supply by $100 million? Assume that banks do not hold excess reservesSay that First Commercial Bank has reserves of $100, loans at $400 and checkable deposits of $500. The required reserve ratio is 10%. If the bank has a deposit outflow of $40, is the bank in violation of the required reserve ratio? What is the maximum amount of deposit outflow the bank can sustain without violating the ratio?Suppose you found Rs. 2000 that was stored under your grandmother's mattress and you decided to deposit this money in a Bank of India. If the desired reserve ratio were 20 percent and all excess reserves were lent out. a) Calculate the money supply created by this deposition in the economy?b) Following a new deposit of Rs. 2000, what is the reserve requirement of the commercial bank?c) Suppose all the banks in the banking system collectively have Rs.20 million in cash reserves and have a desired reserve ratio of 20 percent, the maximum amount of demand deposits the banking system can support is?
- Suppose that you are in an economy with reserve requirements are equal to 11%, and cash drain is equal to 3%. One bank in this economy now recieves an addition $300 of new deposits. What is the total quantity of new bank desposits that this will generate across the entire banking system (in dollars)? Note: round all answers to two decimal places. Do not include currency signs in your answer.Suppose the reserve ratio of all banks is 11.7% and no money is kept in the form of currency outside banks. If the Bank of Canada purchases for 180 dollars worth of bonds from commercial banks, the money supply will increase by how much in the long run? Express your answer in dollars rounded to the nearest second decimal.If the central bank sells $500 in bonds to a bank that has issued $10000 in loans and is exactly meeting the reserve requirement of 10%, what will happen to the amount of loans and to the money supply in general?
- The pandemic has impacted the use of currency in our economy. Explain in your own words, how the changes in the use of currency would affect the monetary base in the banking system, while holding all other factors constant.You just deposited $4,000 in cash into a checking account at the local bank. Assume that banks lend out all excess reserves and there are no leaks in the banking system. That is, all money lent by banks gets deposited in the banking system. Round your answers to the nearest dollar. If the reserve requirement is 20%, how much will your deposit increase the total value of checkable bank deposits? If the reserve requirement is 8%, how much will your deposit increase the total value of checkable deposits? Increasing the reserve requirement decreases the money supply. %24 %24Explain the different determinants of money supply in a country.