ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Through the taking of deposits and making loans, banks create more money that physically exists. destroy money that would physically exist if they were not part of the process. leave the system with exactly the same amount of money as physically exists. have no role in the money creation prograrrow_forwardSuppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 25%. Paolo, a Southeast Mutual Bank customer, deposits $1,800,000 into his checking account at the local branch. Complete the following table to reflect any changes in Southeast Mutual Bank's T-account (before the bank makes any new loans). Deposits Assets (Dollars) 1,800,000 $1,800,000 ▼ Reserves Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 25%. 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) Southeast Mutual Bank Walls Fergo Bank PJMorton Bank $450,000 Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Lucia, who immediately uses the funds to write a check to Kenji. Kenji deposits the funds…arrow_forward10arrow_forward
- Money market mutal fund balances held by businesses $100 money market mutual funds balances held by individuals $220 currency in Bank $10 currency in circulation $70 savings deposits, including money market deposit amounts $50 large-denominated (100,000 or more) time deposits 180 small denominates (100,000 or less) time deposits 80 checkable deposits 90 Refer to the table. Money supply M1 for this economy is A.) 160 b) 70 c. 90 D. 170arrow_forwardRefer to Figure 14.5. Assume the interest rate equals 8% and the money supply decreases from to . If the interest rate remains at 8%: money demand will increase. money demand will decrease. there will be an excess demand for money. there will be an excess supply of money.arrow_forwardItem Billions of Dollars Money market mutual $50 funds Currency in the hands of 650 the public Small denomination time 25 deposits Checkable deposits in 700 the hands of the public Money market deposit 430 accounts Referring to the above table, the size of the M1 money supply is $1,350 billion. O True O Falsearrow_forward
- Considering the following data (expressed in billions of U.S. dollars), calculate Ml and M2. Explain. Currency 1,050 Savings deposits 5,500 Small-denomination time deposits 1,000 Traveler’s checks outside banks and thrifts 10 Total money market mutual funds 800 Institution-only money market mutual funds 1,800 Transactions deposits 1,140arrow_forwardQUESTION 7 The use of a dollar bill to buy a concert ticket represents the function of money as a Omedium of exchange. unit of account. Ostore of value all of thesearrow_forwardMoney Market Mutual Fund Balances Held by Businesses $100 Money Market Mutual Fund Balances Held by Individuals 220 Currency in Banks 10 Currency in Circulation 80 Savings Deposits, Including Money Market Deposit Accounts 50 Large-denominated ($100,000 or more) Time Deposits 180 Small-denominated ($100,000 or less) Time Deposits 80 Checkable Deposits 100. Money supply M1 for this economy isarrow_forward
- In 2014, the net worth of a bank was $750$750 billion, and the value of customers' deposits was $300$300 billion. In 2019, the net worth of the bank increased by $175$175 billion, and the value of savings accounts increased by $270$270 billion.Calculate the difference in the bank's total assets between 2014 and 2019.arrow_forward"If the required reserve ratio is 20% and the current deposit is $50,000. Calculate the amount of new money created." O"$200,000" O "$250,000" O"$10,000" "$40,000"arrow_forwardwhich of the following is included in M1? a. traveler's check b. money market deposit accounts c. saving accounts d. money market mutual funds e. none of the abovearrow_forward
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