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: $ T 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 king system. Banks choose to loan out all excess reserves. 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. tivate Windows

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: $ T 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 king system. Banks choose to loan out all excess reserves. 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. tivate Windows

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter13: Monetary Policy

Section: Chapter Questions

Problem 11E

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Suppose you win on a scratch-off lottery ticket and you decide to put all of your $3,500 winnings in the bank. The reserve requirement is 5%. How much maximum of new money will be created (maximum amount of new checking deposits created by the banking system) as a result of your bank deposit? Hint: do not count your initial deposit as part of increase. Number $70000 ☐ ☐ Incorrect. The bank can only loan out excess reserves. Calculate the excess reserves after the lottery winnings were deposited, than multiple that number by the money multiplier. Which events could cause the increase in the money supply to be less than its potential? Check all that apply. Some loan recipients choose to hold some cash instead of depositing all of it in banks. All money loaned out is deposited back into the banking system. Banks decide to keep some excess reserves on hand. Banks choose to loan out all excess reserves.
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 %24
Suppose you inherited $257,000 cash from a bequest, and you decide to deposit it at your bank. Assuming the $257,000 is the only money supply in the economy, your task is to determine how much money your bank can create using the $257,000 you deposited. Show all your calculations The required reserve ratio is 3.5%. a. How much of the initial money supply can the bank give out as loans? If the recipient of the loan keeps the money at the same bank, what will be the total money supply in the economy? b. How much of the new money supply can the bank give out as loans? Will it increase or decrease the total money in the economy? By how much? c. Suppose the required reserve ratio increases by 4.5%, repeat steps in parts (a) and (b). What is the total money supply in the economy? Thank you so much!!
Suppose you win on a scratch-off lottery ticket and you decide to put all of your $3,500 winnings in the bank. The reserve requirement is 5%. 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? Banks choose to loan out all excess reserves. 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. All money loaned out is deposited back into the banking system.
The task I am struggling with: Tracy Williams deposits $500 that was in her sock drawer into a checking account at the local bank. The reserve ratio is 10%. a) how dies the deposit initially change the T-account of the local bank? How does it change the money supply? b) If the bank maintains a reserve ratio of 10%, how will it respond to the new deposit? c) if every time the bank makes a loan, the loan results in a new checkable bank deposit in a different bank equal to the amount of the loan, by how much could the total money supply in the economy expand in response to Tracy´s initial cash deposit of $500? Thank you very much for your help.
The people in an economy have $10 million in money. There is only one bank that all the people deposit their money in and it holds 20% of the deposits as reserves. What is the money multiplier in this economy?
Your friend Sarah borrows money from her bank to buy a car. Explain to her the transactions in which the bank sets up the loan, and why the loan involves an increase in the money supply.
Imagine you saved $2,500 at Bank of Prosperity. There, they maintain a reserve requirement of 9%. Create a T-account to show how Bank of Prosperity will allocate your deposit so that debits = credits. Then, using the money multiplier, show how your deposit affects the economy by providing dollars in the market for loanable funds.
Jane deposits $175 into her bank, and the reserve requirement is 15 percent. How much is the excess reserve in dollars
You 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?
You just earned $25.000 which you deposit it in a bank account, How much can fractional-reserve banking potentially increase the money supply if only 10% of the deposit is kept in reserve by the bank.
A deposit of $100 was made to the bank as we know the money supply won't increase until the bank loans the $100. If the required reserve ratio is 6%, how much will the money supply ultimately increase once this new deposit has gone all the way through the system? What is the money multiplier in this case?