(a) To explain: If the withdrawal of $100 from a checking account will impact the money supply.

Question

The task I am struggling with: Tracy Williams deposits $500 that was in her sock drawer into a checking account at the local bank. The reserve ratio is 10%. a) how dies the deposit initially change the T-account of the local bank? How does it change the money supply? b) If the bank maintains a reserve ratio of 10%, how will it respond to the new deposit? c) if every time the bank makes a loan, the loan results in a new checkable bank deposit in a different bank equal to the amount of the loan, by how much could the total money supply in the economy expand in response to Tracy´s initial cash deposit of $500? Thank you very much for your help.

Answer 1

Question

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 30, Problem 4QFR

To determine

(a)

To explain:

If the withdrawal of $100 from a checking account will impact the money supply.

To determine

(b)

To explain:

If the withdrawal of $100 from a checking account will impact the bank's required reserves.

To determine

(c)

To explain:

If the withdrawal of $100 from a checking account will impact the bank'sexcess reserves.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Students have asked these similar questions

The task I am struggling with: Tracy Williams deposits $500 that was in her sock drawer into a checking account at the local bank. The reserve ratio is 10%. a) how dies the deposit initially change the T-account of the local bank? How does it change the money supply? b) If the bank maintains a reserve ratio of 10%, how will it respond to the new deposit? c) if every time the bank makes a loan, the loan results in a new checkable bank deposit in a different bank equal to the amount of the loan, by how much could the total money supply in the economy expand in response to Tracy´s initial cash deposit of $500? Thank you very much for your help.

Which of the following activities will affect a bank’s required reserves? why? a. The local Girl Scout troop collects coins and currency to buy a new camping stove. The troop deposits $250 in coins and opens a small-time deposit. b. You decide to move $200 from your MMDA to your NOW account. c. You sell your car to the teller at your bank for $5,000. The teller pays with a check drawn on the bank, and you deposit the check immediately into your checking account at the bank

If you deposit $40 into a checking account, and your bank has a 10% reserve requirement, the bank's excess reserves will rise by $

Answer 2

Question

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 30, Problem 4QFR

To determine

(a)

To explain:

If the withdrawal of $100 from a checking account will impact the money supply.

To determine

(b)

To explain:

If the withdrawal of $100 from a checking account will impact the bank's required reserves.

To determine

(c)

To explain:

If the withdrawal of $100 from a checking account will impact the bank'sexcess reserves.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 3

Question

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 30, Problem 4QFR

To determine

(a)

To explain:

If the withdrawal of $100 from a checking account will impact the money supply.

To determine

(b)

To explain:

If the withdrawal of $100 from a checking account will impact the bank's required reserves.

To determine

(c)

To explain:

If the withdrawal of $100 from a checking account will impact the bank'sexcess reserves.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 4

Question

Definition Definition Capital reserves held by banks or financial institutions over and above the reserves that are required to be maintained by the regulator toward its liabilities and for internal controls. For commercial banks, excess reserve is the amount over the standard reserve as decided by the central bank. These excess reserve funds are available in the form of cash and cash equivalents.

Chapter 30, Problem 4QFR

To determine

(a)

To explain:

If the withdrawal of $100 from a checking account will impact the money supply.

To determine

(b)

To explain:

If the withdrawal of $100 from a checking account will impact the bank's required reserves.

To determine

(c)

To explain:

If the withdrawal of $100 from a checking account will impact the bank'sexcess reserves.

Expert Solution & Answer

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 5

Chapter 30, Problem 4QFR

To determine

(a)

To explain:

If the withdrawal of $100 from a checking account will impact the money supply.

To determine

(b)

To explain:

If the withdrawal of $100 from a checking account will impact the bank's required reserves.

To determine

(c)

To explain:

If the withdrawal of $100 from a checking account will impact the bank'sexcess reserves.

Answer 6

Chapter 30, Problem 4QFR

To determine

(a)

To explain:

If the withdrawal of $100 from a checking account will impact the money supply.

Answer 7

Chapter 30, Problem 4QFR

To determine

(a)

To explain:

If the withdrawal of $100 from a checking account will impact the money supply.

Answer 8

To determine

(b)

To explain:

If the withdrawal of $100 from a checking account will impact the bank's required reserves.

Answer 9

To determine

(b)

To explain:

If the withdrawal of $100 from a checking account will impact the bank's required reserves.

Answer 10

To determine

(c)

To explain:

If the withdrawal of $100 from a checking account will impact the bank'sexcess reserves.

Answer 11

To determine

(c)

To explain:

If the withdrawal of $100 from a checking account will impact the bank'sexcess reserves.

Answer 12

Expert Solution & Answer

Answer 13

Expert Solution & Answer

Answer 14

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 15

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 16

Trending nowThis is a popular solution!

See solution

Check out sample textbook solution

Answer 17

Trending nowThis is a popular solution!

Answer 18

Trending nowThis is a popular solution!

Answer 19

Trending nowThis is a popular solution!

Answer 20

Trending now

Answer 21

This is a popular solution!

Answer 22

See solution

Check out sample textbook solution

Answer 23

Ch. 30 - Prob. 1QFR Ch. 30 - Prob. 2QFR Ch. 30 - Prob. 3QFR Ch. 30 - Prob. 4QFR Ch. 30 - Prob. 5QFR Ch. 30 - Prob. 6QFR Ch. 30 - Prob. 7QFR Ch. 30 - Prob. 8QFR Ch. 30 - Prob. 9QFR Ch. 30 - Prob. 10QFR

(a) To explain: If the withdrawal of $100 from a checking account will impact the money supply.

Solution Summary: The author explains that the withdrawal of 100 from a checking account will impact the bank's required reserves.

(a)

To explain:

If the withdrawal of $100 from a checking account will impact the money supply.

(b)

To explain:

If the withdrawal of $100 from a checking account will impact the bank's required reserves.

(c)

To explain:

If the withdrawal of $100 from a checking account will impact the bank'sexcess reserves.

Chapter 30 Solutions

(a) To explain: If the withdrawal of $100 from a checking account will impact the money supply.

Solution Summary: The author explains that the withdrawal of 100 from a checking account will impact the bank's required reserves.

(a) To explain: If the withdrawal of $100 from a checking account will impact the money supply.

(b) To explain: If the withdrawal of $100 from a checking account will impact the bank's required reserves.

(c) To explain: If the withdrawal of $100 from a checking account will impact the bank'sexcess reserves.

Chapter 30 Solutions

(a)

To explain:

If the withdrawal of $100 from a checking account will impact the money supply.

(b)

To explain:

If the withdrawal of $100 from a checking account will impact the bank's required reserves.

(c)

To explain:

If the withdrawal of $100 from a checking account will impact the bank'sexcess reserves.