ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Suppose a bank has a total deposit of $748 million. If the bank's required reserves equal $253
million, total loans equal $368 million, then the bank has excess reserves of:
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- During recessions, banks typically chose to hold more excess reserves relative to their deposits. What did this action cause?arrow_forward"Banks hold 100 percent of their customers' deposits as reserves." Is the previous statement correct or not?arrow_forwardIf lines of credit and other off-balance-sheet activities do not, by definition, appear on the bank’s balance sheet, how can they influence the level of liquidity risk to which the bank is exposed?arrow_forward
- With an initial depost of $1000 and a reserve requirement of 4%, what is the total amount of money creation possible? With an initial depost of $1200 and a reserve requirement of 5%, what is the total amount of money creation possible?arrow_forwardFind the amount of money that would be created in the banking system because of the money multiplier if the required reserve ratio is 14%, and a bank that had been holding $1,000 as excess reserves decides to loan all this money out.arrow_forwardThe accompanying table gives data for a commercial bank or thrift. If the legal reserve ratio falls from 25 percent to 10 percent, reserves of this single bank willarrow_forward
- What would be the demand deposits if the Cash Reserve ratio is 13% and the cash reserves are 120?arrow_forwardOur banking system is called Fractional Reserve Banking because: a) banks are required to hold only a fraction of money deposited in them as reserves b) the banks excess reserves are always a faction of their total reserves c) banks hold money in many denominations d) the money in the banks can disappear in a fraction of a secondarrow_forwardInitially, the banking system has a required reserve ratio of 20.0 percent, $450,000 in total deposits, and no excess reserves. If the Fed reduces the required reserve ratio to 15.0, how much unused lending capacity does the banking system now have? Multiple Choice $750,000 $3,000,000 $337,500 $150,000arrow_forward
- The commercial banking system has excess reserves of $4,000. Then new loans of $30,000 are subsequently made, and the system ends up just meeting its reserve requirements. The required reserve ratio must be _%. Your Answer: Answerarrow_forward11arrow_forwardA commercial bank has total deposits of $500 million. The reserve requirement set by the central bank is 10%. Calculate the required reserves and excess reserves of the commercial bank.arrow_forward
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