Macroeconomics
13th Edition
ISBN: 9781337617390
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 12, Problem 2WNG
To determine
Identify the
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Distinguish between legally required reserves and excess reserves.
Required reserves with a bank equal
A) Total reserves plus excess reserves
B) Excess reserves minus demand deposits
C) Total reserves minues excess reserves
D) Demand deposits plus savings account
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: $
Chapter 12 Solutions
Macroeconomics
Ch. 12.2 - Prob. 1STCh. 12.2 - Prob. 2STCh. 12.2 - Prob. 3STCh. 12.3 - Prob. 1STCh. 12.3 - Prob. 2STCh. 12.3 - Prob. 3STCh. 12.4 - Prob. 1STCh. 12.4 - Prob. 2STCh. 12.4 - Prob. 3STCh. 12 - How much money did you make last year? What is...
Ch. 12 - Prob. 2QPCh. 12 - Prob. 3QPCh. 12 - Prob. 4QPCh. 12 - Prob. 5QPCh. 12 - Prob. 6QPCh. 12 - Prob. 7QPCh. 12 - Prob. 8QPCh. 12 - Prob. 9QPCh. 12 - Prob. 10QPCh. 12 - Prob. 11QPCh. 12 - Prob. 12QPCh. 12 - Prob. 13QPCh. 12 - Prob. 14QPCh. 12 - Prob. 15QPCh. 12 - Prob. 16QPCh. 12 - Prob. 17QPCh. 12 - Prob. 1WNGCh. 12 - Prob. 2WNGCh. 12 - Prob. 3WNGCh. 12 - Prob. 4WNGCh. 12 - Prob. 5WNGCh. 12 - Prob. 6WNGCh. 12 - Prob. 7WNGCh. 12 - Prob. 8WNGCh. 12 - Prob. 9WNGCh. 12 - Prob. 10WNG
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- For the following list of items, indicate if they are in M1, M2, or neither: a. Your $5,000 line of credit on your Bank of America card b. $50 dollars’ worth of traveler’s checks you have not used yet c. $1 in quarters in your pocket d. $1200 in your checking account e. $2000 you have in a money market accountarrow_forwardJohn deposits $3,000 into his checking account. If the reserve ratio is 15%, what are the required and excess reserves? Required reserves: $ Excess reserves: $ keep a portion of it and lend out the rest. keep every penny as vault cash since it is such a small amount. lend out every penny since almost all transactions are digital.arrow_forwardWhen you open a checking account at Bank of America, Bank of America has more reserves and more excess reserves. has more reserves, but excess reserves remain unchanged. has more deposits and less in excess reserves. has more deposits, but excess reserves remain unchanged.arrow_forward
- How to calculate the value of deposits when given excess reserves and reserve ratioarrow_forwardMr. Bill Smith lives in Dayton Ohio and always deposits money into a checking account in a bank nearby. Please calculate the money creation in the U.S. banking system with required reserve ratio at 0.25 in each of the following cases: (a) Bill’s parents wired him $100,000 from Germany. (b) Bill won $100,000 cash from a casino in another state. (c) Bill found $100,000 worth of collectable coins underground at his house. (d) Bill got a $100,000 check which is issued in a U.S. bank from his aunt as gift.arrow_forwardThird National Bank has reserves of $20,000 and checkable deposits of $200,000. The reserve ratio is 10 percent. Households deposit $5,000 in currency into the bank, and the bank adds that currency to its reserves. What amount of excess reserves does the bank now have? Instructions: Enter your answer as a whole number. %24arrow_forward
- Does the fact that your bank keeps only a fraction of your account balance in reserve worry you? Why don't people rush off to the bank and retrieve their money? What would happen if they did?arrow_forwardThe First National Bank of Townville has $125,000 in U.S. government securities, $200,000 in savings accounts, $300,000 in checking accounts, $50,000 in its reserve account at the Fed, $10,000 of currency in its vault, and loans of $250,000. What is the amount of its reserves? Show your calculations.arrow_forwardDebit cards allow an individual to transfer funds directly in a checkable account to a merchant without writing a check. How is this different from the way credit cards work? Are either credit cards or debit cards money? Explain.arrow_forward
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