rr = required reserve ratio = 0.15 C = currency in circulation = R200 billion D = checkable deposits = R600 billion ER = excess reserves = R0.8 billion calculate the excess reserve ratio and the money multipli

rr = required reserve ratio = 0.15 C = currency in circulation = R200 billion D = checkable deposits = R600 billion ER = excess reserves = R0.8 billion calculate the excess reserve ratio and the money multipli

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Initial deposit is $10,000 Required Reserve Ratio is 20% Calculate: $ Multiplier Required Reserves Excess Reserves Potential $ Created Initial deposit is $10,000 Required Reserve Ratio is lowered to 10% Calculate: $ Multiplier Required Reserves Excess Reserves Potential $ Created
if the required reserve ratio is 2 percent then the simple deposit multiplier is Enter a whole number
Which of the following is a function of money? a. a unit of account b. medium of exchange c. a store of value d. All of the above are correct.
A bank determines that it is prudent to hold $2 for every $100 in deposits. The bank holds desired reserves of $9,000 and surplus reserves of $11,000. What is the bank's desired reserve ratio and its actual reserves? The bank's desired reserve ratio is ____ percent. The bank's actual reserves are $ _____.
Initial deposit ($100) The Money Multiplier Process Loan Loan $ University Bank Excess reserves: $25 Required reserves: $75 Deposit Bank #2 Deposit Excess reserves: $6.25 Required reserves: $18.75 Instructions: Round your responses to two decimal places. a. What volume of loans can the banking system in the figure support? Bank #3 Loan Deposit Excess reserves: $1.56 Required reserves: $4.69 Bank #4 etc. Excess reserves: $0.39 Required reserves: $1.17 b. If the reserve requirement were 15 percent rather than 75 percent, what would the system's lending capacity be?
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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 required reserve ratio of 10%. How does my deposit of $1,000 at the 1st National Bank of Pandesia impact the money supply in Pandesia after this change? Explain by using the T-account. part-e: Next suppose that Pandesian economy enters a recession. To fight against the unemployment created by the recession, CBP decides to expand the Pandesian money supply.…
5. Money Multiplier: Given: Money Multiplier: 1+c rr+e+C required reserve ratio = 0.10 C = currency in circulation = $ 400 billion D =_ checkable deposits = $800 billion ER = excess reserve - $0.80 billion M = money supply_(M1) = C + D = $1,200 c = currency ratio = C/D = $400/$800= 0.5 e = excess reserve ratio = ER/D = $.80 b/ $800 b Using the formula for the money multiplier above, derive is the Money Multiplier?
Suppose we have the following banking data (in $billion): C = $300 Currency in circulation D = $2,000 Demand deposits rr = 0.10 Required reserve ratio ER = $1,340 Excess reserves in the banking system There are no other types of deposits in the banking system. Calculate for us the following: Currency-deposit ratio (c) Excess-Reserves-deposit ratio (er) = = Money supply = Monetary base Money multiplier (m) = $billion $billion
Given the following information Reserve requirement for demand deposits Cash in circulation Demand Deposits Money Market Deposits Reserves loaned from Central Bank = 12% = RM 210 millions = RM 574 millions = RM287 millions = RM 15 millions Non-loan reserves in Central Bank = RM94 millions Excess Reserves = RM 0.96 millions Assume that the money market deposit is not subject to reserve requirements. Calculate the value of money multiplier for M1 and M2 If you wish that the Central Bank will expand its monetary base (M1) so money supply (M1) would grow by 3% over the next one year, how much should the monetary base change in order to realise the changes? 1. 2.
The Money Supply: Small Time Deposits (less than $100,000) Demand Deposits and other Checkable Deposits Savings Deposits Money Market Accounts for individuals: Money Market Checking Accounts = $15 billion Money Market Savings & Investment Accounts = $10 billion Money Market Mutual Funds' Accounts (less than $100,000) Currency Large Dollar Accounts (over $100,000): Money market mutual funds for individuals, businesses, governments $650 billion $300 billion $445 billion. $645 billion. $325 billion. $880 billion. $750 billion $25 billion $600 billion $130 billion $100 trillion MZM (money-with-zero-maturity) measures the value of the money supply in circulation for households and businesses to immediately buy goods and services. Given the above listed financial data, MZM calculates to: services. Given the above listed financial data, MZM