Bank A has $5,000 in reserves, all required to be held. The required reserve ratio is 10 percent. Bank A has checkable deposits of O $500. O $5,000. O $50,000. O $500,000. Bank A has $5,000 in reserves, all required to be held. The required reserve ratio is 10 percent. Bank A has checkable deposits of$500O $5,000.O $50,000.O $500,000,

A checkable deposit that is also known as demand deposit that makes people to withdraw their funds…

Answered: Bank A has $5,000 in reserves, all…

Bank A has $5,000 in reserves, all required to be held. The required reserve ratio is 10 percent. Bank A has checkable deposits of $500 O$5,000. O $50,000. $500,000,

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Bank A has $5,000 in reserves, all required to be held. The required reserve ratio is 10 percent. Bank A has checkable deposits of O $500. O $5,000. O $50,000. O $500,000.

Bank A has $5,000 in reserves, all required to be held. The required reserve ratio is 10 percent. Bank A has checkable deposits of
$500
O $5,000.
O $50,000.
O $500,000,

Definition Definition Minimum amount that a commercial bank must hold in liquid assets in order to fulfill central bank regulations.

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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…
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Bank of Wealth Balance Sheet Assets Liabilities Demand Deposits $250,000 Required reserves $25,000 Excess reserves $10,000 Total Reserves $35,000 Loans $215,000 Total Assets $250,000 Total Liabilities $250,000 - In the above table, the Bank of Wealth is subject to a required reserve ratio of O 20 percent. O 5 percent. ○ 10 percent. ○ 15 percent.
Imagine that Odyssey National is a brand new bank, and that its required reserve ratio is 10 percent. If it accepts a $1,000 deposit, then its excess reserve balance will be: O $0. $100. O $90. O $910. O $900.
When a bank suffers deposit outflows and has no excess reserves, the bank will generally first try to raise the funds by O A. calling in some loans. B. borrowing from the Fed. C. selling some of its securities. D. selling some loans. Suppose that a bank has $80 in checkable deposits, reserves of $15, and a reserve requirement of 10%. Also assume that the the bank suffers a $10 deposit outflow. If the bank chooses to borrow from the Fed to meet its reserve requirement, then the bank would need to borrow $. (Round your response to the nearest two decimal place.)
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If a bank gets $100 in new reserves from the Fed and the required-reserve ratio is 0.2, then the O rate of interest falls in the economy O money supply grows by $500 O money multiplier is 5 O all of the above
How much money is created by a bank with $20 million in assets if it lends out half of its assets with a required reserve ratio of 10%. O $100,000,000 O $50,000,000 $1,000,000,000 $10,000
A bank can create money by Select one: A. increasing its reserves. B. selling some of its securities. C. lending its excess reserves. D. printing more cheques. O E. converting reserves into securities.
When the reserve requirement is decreased, the excess reserves of member banks are Multiple Choice O reduced, but the multiple by which the commercial banking system can lend is unaffected. O reduced and the multiple by which the commercial banking system can lend is increased. O increased and the multiple by which the commercial banking system can lend is increased. increased and the multiple by which the commercial banking system can lend is reduced.
Question 3 Total reserves in the banking system are the sum of which of the following? O Required reserves and excess reserves. O Required reserves and Treasury Securities held by banks. O Required reserves and customer checking accounts. O Required reserves and customer savings accounts.
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