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part-c: Suppose I live in a hypothetical country, Pandesia, where there is 100% reserve banking. I deposit $1,000 in a checking account at the 1st National Bank of Pandesia. Using the T-account (ie: assets on the left and liabilities on the right), explain whether / how my deposit changes the money supply in Pandesia.
DON'T ANSWER PART C Just use part c to answer D
part-d: Now suppose the Central Bank of Pandesia (CBP) decides that after centuries of 100% reserve banking, it is time for a change and decide to switch the Pandesian banking system to fractional reserve banking. To begin with, board of governors at the CBP agree on a
part-e: Next suppose that Pandesian economy enters a recession. To fight against the
part-f: Finally assume that CBP’s expansionary
part-g: In this question, CBP used the required reserve ratio to adjust their money supply to first fight against unemployment and then against inflation. What other tools could CBP have used to change their money supply?
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- 1. The Federal Reserve a. Is the large stockpile of currency reserved for wartime uses b. May be used for Federal, but not state government uses c. Is responsible for controlling the money supply d. Was established in 1789 with the ratifying of the Constitution 2.In a system of 100% reserve banking, $100 is deposited. What is the money multiplier? a. Depends on what is withdrawn from the account b. 1 c. $100 d. There is insufficient information to state the value of the money multiplierarrow_forward2. Here is the balance sheet of the consolidated banking system of the country of Zargadee (all entries are in millions): Consolidated Balance Sheet of the Entire Economy of Zargadee Assets Reserves Cash in Vault Deposits at CBZ Bonds Loans 50 90 Total Reserves Total Assets 140 460 1000 1600 Liabilities Deposits Borrowing from CBZ Total Liabilities 1400 200 1600 Assume that 1) households hold no currency and 2) banks hold no excess reserves. The current reserve requirement is 10%. The Central Bank of Zargadee (CBZ) uses the three traditional tools to perform monetary policy in an economy that is reserve constrained. a. Under our assumptions, what is the money multiplier? For each part (b)-(d) below, i) Conceptually explain the effect of the policy on the money supply. ii) Calculate the change in M1 given our assumptions. iii) Construct the new balance sheet of the consolidated banking system of Zargadee under the new policy. iv) When the money supply changes, list a chain of events to…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
- urgentt!! hiiii please help me with part A thankyou so much to anyone!!!arrow_forwardSuppose that the following information describes the banking system in Belarus. Currency = $940 billion Checking Deposits = $1,475 billion Total Reserves = S198 billion Required Reserves = $177 billion (a) Calculate the level of the monetary base (MB) in the banking system of Belarus. (b) Given the above data calculate the money multiplier (m). Round vour answer to 2 decimal places.arrow_forwardMoney/Banking/The Quantity of Money Theory (Chapter 14) 1.1 What are the four functions of money? Explain each in your own words. Can something be considered money if it does not fulfill all four functions? 1.2 Using the five criteria in the textbook, explain how U.S. currency is suitable to use as a medium of exchange. 1.3 Suppose that you decide that you no longer want to hold currency, and deposit all of your currency holdings to your checking account. What is the immediate or initial impact of this transaction on M1 and M2?arrow_forward
- need help with c, d and earrow_forwardIf raw whole eggs of uniform size were used as money, which of the following functions of money would be the hardest for this to satisfy? Select one: a. store of value b. unit of account c. medium of exchange d. certificate of goldarrow_forwardWrite the definition of money, its functions, and its characteristics.arrow_forward
- 10. Banks in the country of Mistania have a total of $17000 in required reserves and $276000 in checkable deposits. Calculate Mistania's required reserve ratio:arrow_forward2. Suppose the required reserve ratio is 11%, currency in circulation is $285 billion, the amount of checkable deposits is $600 billion, and excess reserves are $192 billion. Suppose the central bank is fighting rising inflation. The FOMC wants the money supply to fall by $80 billion. Assuming the ratios you calculated in question 1 are the same, calculate the size of the open market sale that would be needed to cause a change in the money supply of $80 billion.arrow_forwardFor this bank what would be the level of excess reserves if the required reserve ratio were 20%? A) 0 B) $300,000 C) $900,000 D) $1,000,000 E) There would be a shortfall in required reserves of $100,000arrow_forward
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