Wells Fargo Bank sells a $1,000 Treasury security to a securities dealer. The dealer pays for the security in cash which the bank adds to its vault cash. The total dollar value of the money supply has not changed by this transaction. Group of answer choices True False
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Money Supply: - In an economy, the total value of money in circulation at a point in time is known as the money supply.
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- The First National Bank has $100million in chequable deposits. The desired reserve ratio is 6%. (i) Calculate the Bank's reserves. Round your answer to two decimal places. (ii) The Bank desires to invest $30million in Treasury bills. The Treasury bills are currently trading at $4986.7 (including brokerage fee). How many Treasury bills does the Bank purchase? Round your answer to the nearest whole number. (iii) The Bank makes commercial loans of $25millions and lends $39.3million in mortgages. Calculate the amount of bank capital. (iv) Complete the balance sheet of the Bank. (v) Assume that there is a shortfall of reserves because depositors withdraw $5million from the Bank. Show the new balance sheet of the Bank. What can the Bank do to eliminate the shortfall of reserves?suppose the required reserve ratio is 5% for all bank . if an individual withdraws $10000 from bank ZIP , what will happen to the money supply in the country (show the multiplier effect) ? (a) the MS will increase by $ 20,000 (b) the MS will increase by $ 2,00,000 (c) the MS will deacrese by $ 2,00,000 (d) the MS will deacrese by $ 10,000The reserve requirement is 10%, and Leroy deposits his $1,000 check received as agraduation gift in his checking account. The bank does NOT want to hold excessreserves.a) Show the bank’s balance sheet immediately after the deposit.b) How much of the deposit is the bank required to keep in reserves?c) How much can the bank loan based on the $1,000 deposit?
- When $1 million is deposited at a bank, the required reserve ratio is 20 percent, and the bank chooses not to hold any excess reserves but instead makes loans, then in the bank's final balance sheet. Choose form options A) the assets at the bank increase by $200,000. B) the liabilities of the bank increase by $200,000. C) reserves increase by $200,000. D) all of the above occur.Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 42Deposits 245Loans 160 Securities 48Other $X Using the balance sheet above, find the level of required reserves for this bank if the required reserve ratio = 8%(Give answers to 2 decimal places as needed)If reserves are scarce, how would the federal funds rate change (increase or decrease) if the Fed: (a) buys mortgage-backed securities (b) conducts overnight repo operations (c) conducts overnight reverse repo operations (d) increases the (minimum) reserve requirements Only typed Answer
- Money is not a good store of value when the average price is falling. True or FalseAssume that the required reserve ratio is 7.00%. The bank manager decides to lend Billy Bob Smith all of the bank's excess reserves. Billy Bob takes the funds to Eula Mae's Used Machines and buys a pickup truck. Eula Mae then deposits the money in her account back at the Smithville Bank. Table 2 should show the bank's accounts after the loan is made and the funds again deposited. Round all answers to the nearest cent. What are the bank's loans in Table 2? What are the bank's reserves in Table 2? What are the bank's deposits in Table 2? Table 1. Original Assets and Liabilities $ $ Assets $ reserves: $3201.00 Table 2. Assets and Liabilities After Bank Makes a Loan Assets reserves: ? Liabilities loans: ? deposits: $3201.00 Liabilities deposits: ?If banks decide to hold some of their excess reserves instead of lending them all out, then: A) the money multiplier will be less than 1 divided by the required reserve ratio. B) depositors will have to borrow more in order to increase the money supply. C) the money multiplier becomes 1 divided by the excess reserves. D) a loan of $1 will lead to a change in the money supply by a multiple amount equal to 1 divided by the required reserve ratio.
- When banks hold excess reserves:a) the reserve ratio should be lowered.b) the money multiplier underestimates how much money will be created in the economy.c) the reserve ratio should be raised.d) It may cause the money multiplier to overestimate how much money will be created in the economy.Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 44Deposits 255Loans 155 Securities 51Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 6%(Give answers to 2 decimal places as needed)John deposits $1,600 into his checking account. If the reserve ratio is 5%, what are the required and excess reserves? Required reserves: $ Excess reserves: $
