Assume that a bank receives a depositof $1,000 in cash, puts aside $200 asrequired reserves, and makes a loan of$800, these transactions imply that:the money multiplier is 10.the money multiplier is 5.the money multiplier is 4.the money multiplier is 2.the money multiplier is 2.

Required reserve ratio= Amount of reserves / deposit received=>Required reserve ratio= $200 /…

Answered: Assume that a bank receives a deposit…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question: How much is the total cash received from the financing of receivables? Round off to the nearest whole number.
Imagine that the banking system's balance sheet can be represented by the following t-account: Assets LIABILITIES AND NET WORTH RESERVES 200 DEPOSITS 2000 BONDS 800 LOANS 1000 NETWORTH 0 TOTAL 2000 TOTAL 2000 Assuming the bank is "loaned up" the required reserve ratio is ___________ (round to two decimal places) The money multiplier is ___________ Imagine that the central bank uses open market operations to buy $300 worth of bonds from the bank above. Fill in the following t-account assuming that the money multiplier has taken its full effect: ASSETS LIABILITIES AND NET WORTH RESERVES __?___ DEPOSITS ___?__ BONDS ____?___ LOANS ____?____ NET WORTH ___?___ TOTAL _____?______ TOTAL ___?___
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Suppose you have a $10 bill in your pocket. How is this money counted in the Fed balance sheet? A. Asset B. The money does not appear on the Fed balance sheet C. Liability
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Assume that a bank receives a deposit of $1,000 in cash, puts aside $200 as required reserves, and makes a loan of $800, these transactions imply that: the money multiplier is 10. the money multiplier is 5. the money multiplier is 4. the money multiplier is 2. the money multiplier is 2.