13. Problems and Applications Q5 You take $150 you had kept under your mattress and deposit it in your bank account. Suppose this $150 stays in the banking system as reserves and banks hold reserves equal to 12.5 percent of deposits. The total amount of deposits in the banking system increases by $ and the money supply increases by $

13. Problems and Applications Q5 You take $150 you had kept under your mattress and deposit it in your bank account. Suppose this $150 stays in the banking system as reserves and banks hold reserves equal to 12.5 percent of deposits. The total amount of deposits in the banking system increases by $ and the money supply increases by $

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: The Monetary System

Section: Chapter Questions

Problem 5PA

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For the following list of items, indicate If they are in M1, M2, or neither: Your 5,000 line of credit on your Bank of America card 50 dollars worth of travelers checks you have not used yet 1 in quarters in your pocket 1200 in your checking account 2000 you have in a money market account
Explain why the money listed under assets on a bank balance sheet may not actually be in the bank?
Can you name some item that is a store of value, but does not serve the other functions of money?
1. You deposit $100 of currency into your account. Explain what happens to reserves , checkabledeposits, and monetary base? 2. Explain what the shadow banking system is and how it works. 3. Your bank has the following balance sheet:Assets LiabilitiesReserves $70 million Checkable deposits $200 millionSecurities $50 millionLoans $130 million Bank capital $50 millionIf the required reserve ratio is 10%, what actions should the bank manager take if there is anunexpected deposit outflow of $50 million? Explain your answer. 4. Explain and demonstrate graphically that if the central bank pursues targeting a monetaryaggregate, it is likely to lose control over the interest rate. 5. In the market for reserves, the federal funds rate is equal to the interest rate paid on excessreserves. Explain and demonstrate graphically the effect of an open market sale on the federalfunds rate.
1. Inventory in detail all the vehicles you use for managing your cash flows, Include all your accounts that are mediated through banks and finance companies. Also, list your cards issued by banks, such as debit or ATM cards, and identify any direct deposits and automatic payments that are made through your savings and checking accounts. How might you further enhance your cash management through the use of banking tools?
6. If a bank has reserves of $75 and excess reserves are equal to $0 when the reserve ratio is 10%, the bank has deposits of $
Suppose a bank gets $500 million dollars in deposits. The bank can only make loans and keep reserves. The bank gives $300 million in loans. The associated new money creation will be worth $ ___ million 500 1250 750 350
2. The Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. Households deposit $5000 in currency into the bank and that currency is added to reserves. 2.1 How much excess reserves does the bank now have? Show your computation. 2.2 Complete the table below for the Third National Bank. Classify the assets and liabilities and net worth. What is the total assets of Third National Bank? The figures in the table below are for the Third National Bank. All figures are in thousands of dollars. Assets Liabilities and Net Worth Stock Shares $ 420 $ _____ $ _____ Reserves 25 _____ _____ Property 300 ____ _____ Securities 100 ____ _____ Loans 100 ____ _____ Demand Deposits 105 ____ _____ 2.3. If the required reserve ratio for the Third National Bank is 10 percent, what is the monetary multiplier?
The table gives information about items on a bank's balance sheet. Calculate the bank's deposits that are part of M1, deposits that are part of M2, and the bank's loans, securities, and Item reserves. (millions of dollars) Checkable deposits Savings deposits Small time deposits 400 The bank's deposits that are part of M1 equal $ million. 500 720 The bank's deposits that are part of M2 equal $ million. Loans to businesses 950 Government securities 600 Currency 30 Reserves at the Fed 40 Enter your answer in the edit fields and then click Check Answer. 2 parts remaining Clear All Check Answer MacBook Air DII DD 80 888 F10 F11 F12 esc F4 F5 F6 F7 F8 F9 F1 F2 F3 ! @ 23 $ % & 1 2 4 6 7 { Y U P Q W E tab S D F G H K А caps lock > + I/ * 00
"If the required reserve ratio is 20% and the current deposit is $50,000. Calculate the amount of new money created." O"$200,000" O "$250,000" O"$10,000" "$40,000"
2. Here is the balance sheet of the consolidated banking system of the country of Zargadee (all entries are in millions): Consolidated Balance Sheet of the Entire Economy of Zargadee Assets Reserves Cash in Vault Deposits at CBZ Bonds Loans 50 90 Total Reserves Total Assets 140 460 1000 1600 Liabilities Deposits Borrowing from CBZ Total Liabilities 1400 200 1600 Assume that 1) households hold no currency and 2) banks hold no excess reserves. The current reserve requirement is 10%. The Central Bank of Zargadee (CBZ) uses the three traditional tools to perform monetary policy in an economy that is reserve constrained. a. Under our assumptions, what is the money multiplier? For each part (b)-(d) below, i) Conceptually explain the effect of the policy on the money supply. ii) Calculate the change in M1 given our assumptions. iii) Construct the new balance sheet of the consolidated banking system of Zargadee under the new policy. iv) When the money supply changes, list a chain of events to…
10 Raquel goes down to Goldenrod Bank and deposits $2350 into their checking account. What has happened to Goldenrod Bank’s balance sheet? Mortgages have increased by $2350 The money multiplier has increased Goldenrod Bank's reserve ratio has increased Goldenrod Bank's liabilities have increased by $2350