2. Required and excess reserves Suppose that Best National Bank currently has $100,000 in checkable deposits and $65,000 in outstanding loans. The Federal Reserve has set the reserve requirement at 10%. Using these values, fill in the empty cells for reserves, required reserves, and excess reserves in the following table. Best National Reserves Required Reserves Excess Reserves (Dollars) (Dollars) (Dollars)

2. Required and excess reserves Suppose that Best National Bank currently has $100,000 in checkable deposits and $65,000 in outstanding loans. The Federal Reserve has set the reserve requirement at 10%. Using these values, fill in the empty cells for reserves, required reserves, and excess reserves in the following table. Best National Reserves Required Reserves Excess Reserves (Dollars) (Dollars) (Dollars)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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8. The reserve requirement, open market operations, and the money supply Consider a system of banking in which the Federal Reserve uses required reserves to control the money supply (as was the case in the United States before 2008). Assume that banks do not hold excess reserves and that households do not hold currency, so the only money exists in the form of demand deposits. To further simplify, assume the banking system has total reserves of $400. Determine the money multiplier as well as the money supply for each reserve requirement listed in the following table. Reserve Requirement (Percent) 20 10 Simple Money Multiplier A higher reserve requirement is associated with a Money Supply (Dollars) money supply. Suppose the Federal Reserve wants to increase the money supply by $200. Maintain the assumption that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%, the Fed will use open-market operations to U.S. government bonds.…
8. The reserve requirement, open market operations, and the moneysupply Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $100. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement Money Supply (Percent) Simple Money Multiplier (Dollars) 15 10 A lower reserve requirement is associated with a money supply. Suppose the Federal Reserve wants to increase the money supply by $100. Again, you can assume that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%, the Fed will use open-market operations to $ worth of U.S. government bonds. Now, suppose that, rather than immediately lending out all excess reserves, banks begin holding some excess reserves due to uncertain economic conditions. Specifically,…
8. The reserve requirement, open market operations, and the moneysupply Assume that banks do not hold excess reserves and that households do not hold currency, so the only form of money is demand deposits. To simplify the analysis, suppose the banking system has total reserves of $300. Determine the money multiplier and the money supply for each reserve requirement listed in the following table. Reserve Requirement Simple Money Multiplier Money Supply (Percent) (Dollars) 5 10 A higher reserve requirement is associated with a money supply. Suppose the Federal Reserve wants to increase the money supply by $200. Again, you can assume that banks do not hold excess reserves and that households do not hold currency. If the reserve requirement is 10%, the Fed will use open-market operations to worth of U.S. government bonds. Now, suppose that, rather than immediately lending out all excess reserves, banks begin…
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51)Consider the following for National City Bank. If the required reserve ratio is 4 percent, the excess reserves of National City Bank is Assets Liabilities Reserves $10,000 Deposits $100,000 Loans $90,000 Select one: a. $10,000 b. $6,000 c. $3,000 d. $4,000
26. To be considered money, a financial asset must be Group of answer choices a. Convertible into gold or silver. b. Serving as a medium of exchange, standard of value, and store of value. c. Coins, currency, or fractional reserve. d. Issued by the Federal Reserve System. e. Kept in banks.
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The table shows the commercial banks' balance sheet (aggregated over all the banks). The commercial banks' desired reserve ratio on all deposits is 10 percent and there is no currency drain. Calculate the bank's excess reserves. >>> Answer to 2 decimal places. Assets Reserves at the Fed Cash in vault Securities Loans The banks' excess reserves are $☐ million. Liabilities (millions of dollars) 2535 20 Checkable deposits 15 Savings deposits 40 95
37. Suppose that Second Republic Bank currently has $200,000 in demand deposits and $130,000 in outstanding loans. All remaining assets are in reserve. The Federal Reserve has set the reserve requirement at 10%. What is the value of this bank's reserve ratio (R)? (pick best answer) A) 15% B) 25% C) 35% D) 45% 2
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