What is the required reserve ratio? 40% 25% 5% 10% Suppose that the Federal Reserve (the "Fed") buys $4 million of bonds from a bond dealer, who immediately deposits the funds in her checking account. What is the initial impact of this transaction? O The banking system's holdings of securities fall by $4 million, and the banking system's total reserves rise by $4 million. O Checkable deposits rise by $4 million, and the banking system's total reserves rise by $4 million. The banking system's holdings of securities rise by $4 million, and the banking system's total reserves fall by $4 million. Checkable deposits rise by $4 million, and the banking system's holdings of securities rise by $4 million. increase/decrease As a result of the Fed's purchase of $4 million of securities, checkable deposits in the banking system can potentially by as muc

What is the required reserve ratio? 40% 25% 5% 10% Suppose that the Federal Reserve (the "Fed") buys $4 million of bonds from a bond dealer, who immediately deposits the funds in her checking account. What is the initial impact of this transaction? O The banking system's holdings of securities fall by $4 million, and the banking system's total reserves rise by $4 million. O Checkable deposits rise by $4 million, and the banking system's total reserves rise by $4 million. The banking system's holdings of securities rise by $4 million, and the banking system's total reserves fall by $4 million. Checkable deposits rise by $4 million, and the banking system's holdings of securities rise by $4 million. increase/decrease As a result of the Fed's purchase of $4 million of securities, checkable deposits in the banking system can potentially by as muc

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose the value of a bank's variable-rate assets is_______ million, and the value of its variable-rate liabilities is $100 million. Since this bank has a negative gap, in market interest rates will decrease bank profits. Select one: O $150; an increase O $150; a decrease $50; a decrease $50; an increase
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QUESTION 11 If the Federal Reserve purchases $250 million in US Treasury Securities, what will happen to overall bank deposits under the following assumptions: Banks convert 100% of excess reserves to loans, borrowers return 70% of cash to bank, and banks' reserve requirement is 10% O $437.5 million O $625 million O $833.33 million O $2500 million O $1750 million
0 Question 16 Suppose the following: • Smokey Bank has total deposits of $600,000. In addition, it currently has outstanding loans in the amount of $400,000 Finally, the required reserve ratio is 15%. . . What is the money multiplier? O 0.90 0.10 090 15 O 6.67
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Reserves Loans = A. 250/0.16 $1,562.5 B. 300/0.16 $1,875 C. 500/0.17 = $2,941.18 D. 300/0.196= $1,530.61 O E. not enough information to determine = Bank North's Balance Sheet Assets $300 Deposits Capital $1,800 $2,100 Refer to the table above. Assume that Bank North is operating at its target reserve ratio and has no excess reserves, and that all commercial banks have the same target reserve ratio. If a new deposit to the Canadian banking system of $500 is deposited at Bank North, the total new deposits created in the banking system can be calculated as follows: Liabilities $1,800 $300 $2,100
QUESTION 1 If the reserve ratio is 5% then the money multiplier is? O 20; This means that for every dollar deposited into a bank account, the money supply decreases by $20. O 20. This means that for every dollar deposited into a bank account, the money supply increases by $20. O 2. This means that for every dollar deposited into a bank account, the money supply decreases by $2. O 20. This means that for every dollar deposited into a bank account, the money supply increases by $2.
Which set of actions could the central bank use to increase the money supply? Select one: O a. an open market purchase and a tax cut O b. a discount rate cut and an open market sale O c.a reduction in the required reserve ratio and an open market purchase O d. a reduction in the required reserve ratio and an open market sale
Which government body is primarily responsible for regulating banks and ensuring the health of the banking system? O a. The Federal Reserve Board O b. Federal Deposit Insurance Corporation Oc. The regional Federal Reserve Banks O d. The U.S. Treasury
Question 34 Table 29-4 Reserves Loans Assets Bank of Smileville $4,000 Deposits 46,000 Liabilities $50,000 Refer to Table 29-4. The Bank of Smileville's reserve ratio is O a. 11.3 percent. b. 13.4 percent. c. 8.7 percent. O d. 8.0 percent.
If a bank gets $90 in new reserves from the Fed and the required-reserve ratio is 0.1, then the maximum amount by which total deposits in the economy can increase is O $900 O $90 O $9 O $80
Suppose that the reserve requirement is 12.5% and that commercial banks are NOT holding excess reserves. If the Federal Reserve wishes to reduce the money supply by $200 billion, it should conduct an open-market purchase of $16 billion O open-market purchase of $25 billion open-market sale of $16 billion O None of these answers is correct. O open-market sale of $25 billion