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

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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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21. Republic Bank has $2 million in deposits and $250,000 in reserves. If the required reserve ratio is 10%, excess reserves are equal to: $200,000. $50,000. zero $450,000.
7. The money creation process Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 10%. Hubert, a client of First Main Street Bank, deposits $500,000 into his checking account at First Main Street Bank. Complete the following table to reflect any changes in First Main Street Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 10%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves Change in Required Reserves (Dollars) (Dollars) (Dollars) 500,000 Now, suppose First Main Street Bank loans out all of its new excess reserves to Eileen, who immediately uses the funds to write a check to Clancy. Clancy…
(Module 25) Suppose the First Bank of Burgin knows that the Central Bank has specified a required reserve ratio of 10%. Currently the bank has $1,000,000 in cash reserves. a. If the bank is holding no excess reserve cash, what are total deposits at the First Bank of Burgin? Explain. b. Suppose Sandra finds $2000 in her sofa and deposits the money at the bank. If the First Bank of Burgin holds no excess reserves, how much can the bank lend and how much cash must the bank hold in required reserves? c. At most how much will Sandra's deposit increase the money supply? d. Suppose the Federal Reserve conducts expansionary OMO using the First Bank of Burgin. i. How will the Federal Reserve inject the money into the system? ii. Will OMO have any effect on the required reserves of the first bank? e. Draw a correctly labeled graph of the money market and show the effect of the monetary policy action identified in part (d) on the equilibrium nominal interest rate. f. Based on the change in the…
9. Bank leverage Use the information presented in Midwestern Mutual Bank's balance sheet to answer the following questions. Bank's Balance Sheet Assets Liabilities and Owners' Equity Reserves $150 Deposits $1,200 Loans $600 Debt $200 Securities $750 Capital (owners' equity) $100 Suppose the owners of the bank borrow $100 to supplement their existing reserves. This would increase the reserves account and the account. This would also bring the leverage ratio from its initial value of to a new value of Which of the following is true of the capital requirement? Check all that apply. Its intended goal is to protect the interests of the depositors. Its intended goal is to protect the interests of those who hold equity in the bank. It specifies a minimum leverage ratio for all banks.
Completed 10 out of 40 O Macmillan Learning Which is NOT a function of the Federal Reserve? regulating the U.S. money supply providing loans to small businesses serving as the lender of last resort regulating the U.S. financial system II 99+
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-The Golden State Bank has total cash reserves of $110,000, deposits of $200,000, and loans of $90,000. The reserve requirement is 5 percent. This bank can make additional loans up to the amount of: $10,000 $5,500 $100,000 $190,000
19. Which of the following instruments is not used by the Federal Reserve to change the money supply? the discount rate (b) the required reserve ratio (c) the federal tax code (d) open market operations
14. With reference to the Federal Reserve's M1 and M2 measures of the money supply, please indicate whether funds held in each of the forms listed below are included only in M1, only in M2, in both M1 and M2, or in neither M1 nor M2. (a) Money market mutual fund shares. (b) Bank reserves. ге (c) Demand deposits. (d) Small (under $100,000) certificates of deposit. (e) Currency in circulation.
45) First National Bank has $160 million in checkable deposits, $30 million in deposits with the Federal Reserve, $10 million cash in the bank vault, and $10 million in government bonds. Given the bank's minimum reserve ratio of 20% and a goal of holding zero excess reserves, how much can the bank issue in additional loans? a) $152 million b) $16 million c) $12 million d) $8 million.
15. Suppose a bank has $3,000 in reserves, $25,000 of deposits, and a 10 percent reserve requirement. What is the amount of excess reserves?
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