Assume that the Habib Bank of Pakistan has total reserves of Rs. 50 Million. Assume also that required reserves are 15 percent of checking deposits and that bank hold no excess reserves and households hold no currency. Show a T-account for Habib Bank Calculate the money multiplier and Calculate the money supply If the State Bank of Pakistan now raises required reserves to 25 percent of deposits, What will be the effect on money multiplier? . What will be the effect on Reserves? What will be the effect on money Supply?

Banks in New Transylvania have a desired reserve ratio of 10 percent of deposits and no excess reserves. The currency drain ratio is 50 percent of deposits. Now suppose that the central bank increases the monetary base by $900 billion. How much of the initial amount loaned does not return to the banks but is held as currency? Why does a second round of lending occur? Calculate money multiplier in this example? What is the final increase in the quantity of money? Give typing answer with explanation and conclusion

.  If the required reserve ratio decreases, the money multiplier increases. money multiplier decreases. the economy will experience immediate stagflation. money multiplier stays the same.

Suppose the Federal Reserve set the reserve requirement at 20%. Assume that banks lend all reserves that are not required to be held. Instructions: Round your answers to two decimal places. a. Complete the table below based on this information. Fractional Reserve Banking Transaction Sean receives $1,000 in cash and deposits the funds into his checking account. Sean's bank loans Maria all reserves that are not required to be held. Maria's bank loans Jackson all reserves that are not required to be held. Transaction Sean receives $1,000 in cash and deposits the funds into his checking account. Sean's bank loans Maria all reserves that are not required to be held. Deposit Maria's bank loans Jackson all reserves that are not required to be held. $1,000.00 Jackson's bank loans Paul all reserves that are not required to be held. Total Money Created by Transactions b. Suppose Instead that the reserve requirement is 15%. Complete the table using the new reserve requirement. Fractional Reserve…