Suppose the Federal Reserve has set the money supply at $6 million. The table below shows the interest rate and total demand for money. Interest Rate Demand (in millions) 20% 15 10 5 0 $0 3 6 9 12 What is the equilibrium interest rate? Multiple Choice 5 percent O 15 percent 10 percent O O percent コ @ 72 54 a $ #3 M E < Previ 3 of 20 % al5 Next > MacBook Pro 16 & 87 7 8* R T Y U 61 A 1
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- Use the figure below to answer the following question(s): Rate of Interest (%) O OG OC OH Sm3 OD 00 Smi 10 Sm2 D Q3 Q₁ Q₂ Quantity of Money -Dmz -Dm1 Refer to the above graph which shows the supply and demand for money where Dm1, Dm2, and Dm3 represent different demands for money and Sm1, Sm2, and Sm3 represent different levels of the money supply. The initial equilibrium point is A. What will be the new equilibrium point following an increase in the money supply? -Dm3 Jhay GCorry has an income of $80,000 that he is willing to spend over a year. If his bank account's interest rate is 3.05% and the cost associated for him to visit the bank is $5.00. What is Corry's average money holding? O a. $488.00 O b. $2,560.74 O c. $5,000.00O O d. $16.00 O Type here to search 24What are some ways that someone looking for a loan might reassure a bank that is faced with imperfect information about whether the borrower will repay the loan?
- Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 32Deposits 205Loans 150 Securities 53Other $X Using the balance sheet above, find the level of required reserves for this bank if the required reserve ratio = 8%(Give answers to 2 decimal places as needed)(Refer to Figure). At an interest rate of 8%, there is " ME win Money Mullivesc) A) an excess demand for money of $400 billion B) an excess supply of money of $800 billion C) an excess supply of money of $400 billion. D) an excess demand for money of $800 billionMr. Pierpont has wealthof $200,000. He wants to keep at least $80,000 in bonds at all times, and will shift $10,000 into bonds from his checking account for each percentage point that the interest rate on bonds exceeds the interest rate on his checkingaccount. Currently, he keeps $100,000 in bonds, which pay him 7%. What is the current interest rate on checking accounts?A) 5%B) 7%D) 10%C) 9%
- 12. Use the table below for the next set of questions. Column 1 shows the interest rate, column 2 shows the demand for money, and columns 3–5 show the supply of money. All quantities are in millions ($). (1) Interest rate (2) Dm (3) Sm1 (4) Sm2 (5) Sm3 10% $1500 $2200 $2500 $1800 8 1800 2200 2500 1800 6 2200 2200 2500 1800 4 2500 2200 2500 1800 2 2800 2200 2500 1800 (a)Given the demand for money, what will the equilibrium interest rate be for each of the different supply of money schedules? (b)Assume the economy was in equilibrium at Dm and Sm1. If the FED decides to change the money supply to Sm2 and the interest rate stays the same, how much of a shortage or surplus in the money supply will there be? Describe what will happen in…The more frequently a bank compounds interest, ____ will be. Group of answer choices the higher the stated interest rate the higher the APY the lower the APY the lower the stated interest rateThe commercial banks are loaned up and have reserves of $600 billion. Now the required reserve ratio is changed from 10% to 5%. Initially, excess reserves will will by $ decrease; 250 decrease; 350 O decrease; 200 increase; 350 increase; 400 increase; 300
- Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 44Deposits 255Loans 155 Securities 51Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 6%(Give answers to 2 decimal places as needed)1 Which of the following is a component of money? a) bonds b) saving c) income d) stocks e) none of the above 2 Which of the following will increase the amount of moeny one wishes to hold? a) an increase in the interest rate increase b) a reduction in the interest rate increase c) a reduction in income d) none of the above 1.5 At the current interest rate, suppose the supply of money is less than the demand for money. Given this information, we know that: a) the price of bonds will tend increase. b) the price of bonds will tend to fall. c) production equals demand. d) the goods market is in equilibrium.9. How would you incorporate security considerations/costs into the transactions demand model? What would this imply for the demand for currency in a relatively insecure urban environment (a) compared with a relatively safe one, (b) when owner-identified smart cards become available? Do these factors affect the demand for demand deposits? How would the proportion of currency to demand deposits be affected in these cases? 10. Can the transactions demand model be used to explain why financial innovations in recent decades have reduced the transactions demand for M1? 11. Are transactions demand models useless, as Sprenkle (1969) argued? If they are, how would you explain the demand for M1 or just for demand deposits in the economy?
