Answered: If the fed buys $250 million in bonds.…

If the fed buys $250 million in bonds. If the money supply increases by $1250 because of this, what is the reserve ratio?

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. If the fed buys $250 million in bonds. If the money supply increases by $1250 because of this, what is

the reserve ratio?

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The federal funds rate is: Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a the interest rate that the Federal Reserve charges banks when banks borrow reserves from the Federal Reserve. b the market interest rate that banks pay each other when they borrow reserves from each other. c the interest rate the the Federal Reserve pays on banks' required reserves. d the interest rate that the Federal Reserve pays on banks' excess reserves.
In the market for reserves, assume that the federal funds rate is 4.5%, the discount rate is at 5%. If the Federal Reserve Bank wants to decrease the equilibrium interest rate, they can A raise the required reserve ratio B lower the discount rate C sell securities D raise the discount rate
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Fill in the blanks to make the following statements correct. a. Suppose the Bank of Canada purchases a $10,000 bond from Bob's Financial Firm, and Bob's deposits its cheque at the CIBC. This is a new deposit to the banking system and will allow the commercial banks to lend more b. If the CIBC has a target reserve ratio of 20 percent, it will keep $ 2000 as reserves and will lend $ 8000. c. Assuming there is no cash drain from the banking system, the ultimate effect is x$10,000 = $ in deposits in the banking system of a decrease an increase
Assume that the bank makes these loans. What will the new balance sheet look like? By how much has the money supply increased or decreased? If the money multiplier is 5, how much money will ultimately be created by this event?
suppose the reserve requirement is 10 percent and the balance sheet of the peoples national bank looks like the accompanying example.ASSETSvault cash - $20,000deposits at fed - 30,000securities - 45,000loans - 120,000LIABILITIESchecking deposits - $200,000net worth - 15,000answer the following:A. what are the required reserves of people national bank? does the bank have any excess reserves?B. what is the maximum loan that the bank could extend?C. indicate how the banks balance sheet would be altered if it extended this loan.D. suppose that the required reserves were 20 percent. if this were the case, would the bank be in a position to extend any additional loans? explain
5. Helga sells a bond to the Fed for $1000. She deposits $900 in her bank and keeps the rest as cash. Show the impact on her bank’s balance sheet after the bank achieves equilibrium. The rrr = 10%. 6. Calculate the change in the money supply as a result of Helga’s actions. 7. How can a bank be illiquid but not insolvent? 8. The money supply is $100,000, which consists entirely of bank deposits, and required reserves are $1000. How much is deposited in banks? 9. Why don’t banks like to hold excess reserves?
Typed answer please. I ll rate accordingly.
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The graph shows the demand curve for bank reserves, RD. The current quantity of reserves supplied is $20 billion. Draw a point on the curve that shows the federal funds rate when the quantity of reserves supplied is $20 billion. Label it 1. The Fed wants to set the federal funds rate at 4 percent a year. Draw a supply of reserves curve that achieves the target. Label it. Draw a point to show the new equilibrium federal funds rate. Label it 2. To change the federal funds rate from 5 percent a year to 4 percent a year, the Fed conducts an open market of securities. 8- 7- 6- 5- 4- 3- 2- 1- to 0 Federal funds rate (percent per year) RD Q Q 20 10 30 40 50 60 70 80 Reserves on deposit at the Fed (billions of dollars) >>> Draw only the objects specified in the question. ✔
Question 3 If the Federal Reserve wants to increase the money supply, it can O increase the reserve ratio, allowing banks to loan more money to customers. O reduce the reserve ratio, allowing banks to loan more money to customers. sell bonds on the open market to banks, allowing them to loan less money to customers. O increase the reserve ratio, making it harder for banks to loan money to customers. Question 4 DELL C