Which of the following actions by the Bank of Canada will result in an immediate increase of approximately $600 million in excess reserves for banks? (Assume a target reserve ratio of 30%.) OA. Transfer $600 million out of commercial bank deposits into its own accounts. OB. Purchase $857 million of government securities from the non-bank public, because of the 30% target reserve ratio OC. Purchase $600 million of government securities from the non-bank public OD. Purchase less than $600 million of government securities from the non-bank public OE. Sell $857 million of government securities to banks, because of the 30% target reserve ratio OF. Sell $600 million of government securities to banks OG. Sell less than $600 million of government securities to banks

Which of the following actions by the Bank of Canada will result in an immediate increase of approximately $600 million in excess reserves for banks? (Assume a target reserve ratio of 30%.) OA. Transfer $600 million out of commercial bank deposits into its own accounts. OB. Purchase $857 million of government securities from the non-bank public, because of the 30% target reserve ratio OC. Purchase $600 million of government securities from the non-bank public OD. Purchase less than $600 million of government securities from the non-bank public OE. Sell $857 million of government securities to banks, because of the 30% target reserve ratio OF. Sell $600 million of government securities to banks OG. Sell less than $600 million of government securities to banks

Principles of Macroeconomics (MindTap Course List)

7th Edition

ISBN:9781285165912

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Monetary System

Section: Chapter Questions

Problem 5PA

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In a program of deposit insurance as it is operated in the United States, what is being insured and who pays the insurance premiums?
Explain how to use an open market operation to expand the money supply.
Explain what would happen if banks were notified they had to increase their required reserves by one percentage point from, say, 9 to 10 of deposits. What would their options be to come up with the cash?
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
Which of the following statements concerning the changes that occur is correct if you were to make a $ 200 deposit into your chequing account at YourBank? The desired reserve ratio is 0.10. O A. YourBank has assets of desired reserves = $20; excess reserves =- $180; and liabilies of chequable deposits of $ 200. O B. YourBank has assets of chequable deposits of $ 200; assets desired reserves = $20; and excess roserves of $180. OC. YourBank has assets of desired reserves = $180; excess reservos = $20; and liabilities of chequable deposits of $ 200. O D. YourBank has assets of chequable deposits of $ 200; assets desired reserves = $160; and excess reserves of $20. Question Viewer
Northern Bank: Balance Sheet Assets Liabilities Deposits Capital $7,000 $1,000 $8,000 Reserves $420 $7,580 $8.000 Loans Refer to the table above. Assume that Northern Bank's target reserve ratio is 8 percent. In order to achieve its target reserve ratio, Northern Bank must and O A. increase its reserves by $140; decrease its deposits by $140 O B. increase its reserves by $280; increase its loans by $380 OC. increase its reserves by $280; decrease its deposits by $280 O D. increase its reserves by $140; decrease its loans by $140 O E. not change its reserves; not change its deposits
Assume that the balance sheet of a bank in your assigned country as below:Assets LiabilitiesReserves $5,000 Deposits $40,000Loans $45,000 Capital $10,000a. If the required reserve ratio is 3 percent, then how much does this bank has excessreserves?b. Suppose a bank purchases $1,500 of government securities using funds from reserves.How much do bank assets change as a result of this transaction? Show the change inthe balance sheet above. How much does Money Supply change due to this transaction?c. Calculate the bank’s leverage ratio. What is the maximum decrease (in %) in the marketvalue of assets before the bank becomes insolvent?
Assume the Continental National Bank's balance statement is as follows:Assets:reserves $40,000loans $25,000securities $110,000Liabilities + net worthcheckable deposits $130,000stock shares $45,000Assuming a legal reserve ratio of 20 percent, how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?$3,000.$24,000.$6,000.$16,000.
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Suppose the total reserves held by banks amount to R13.09 million. Banks hold R1 in excessreserves for every R10 of required reserves held and the required reserve ratio (r) is 8.5%. Thetotal amount of currency = R60 million. Calculate the amount of required reserves, and totalamount of deposits held by banks, and the total amount of money supply in the system.
7. The money creation process Suppose Southeast Mutual Bank, Walls Fergo Bank, and PJMorton Bank all have zero excess reserves. The required reserve ratio is presently set at 20%. Darnell, a Southeast Mutual Bank customer, deposits $1,500,000 into his checking account at the local branch. Complete the following table to reflect any changes in Southeast Mutual Bank's T-account (before the bank makes any new loans). Assets Liabilities Complete the following table to show the effect of a new deposit on excess and required reserves when the required reserve ratio is 20%. Hint: If the change is negative, be sure to enter the value as negative number. Amount Deposited Change in Excess Reserves (Dollars) (Dollars) 1,500,000 Change in Required Reserves (Dollar) Now, suppose Southeast Mutual Bank loans out all of its new excess reserves to Beth, who immediately uses the funds to write a check to Andrew. Andrew deposits the funds immediately into his checking account at Walls Fergo Bank. Then…
12) Based on the information in the table, we can conclude that, in 1932, each of the followin occurred except: December 1931 December 1932 Currency held by Reserve-deposit public (in billions) ratio $4.59 $4.82 0.095 0.109 Bank reserves (in billions) $3.11 $3.18 Money supply (in billions) $37.3 $34.0 A) The Federal Reserve injected reserves into the banking system. B) Banks were keeping more of their deposits in reserves, and making fewer loans. C) The Federal Reserve conducted open-market sales of U.S. government bonds. D) The public increased the amount of currency it held.