You take $300 you had kept under your mattress and deposit it in your bank account. Suppose this $300 stays in the banking system as reserves and banks hold reserves equal to 15 percent of deposits. The total amount of deposits in the banking system increases by $_ and the money supply increases by $__.

You take $300 you had kept under your mattress and deposit it in your bank account. Suppose this $300 stays in the banking system as reserves and banks hold reserves equal to 15 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

See similar textbooks

Similar questions

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 $50 million? Explain your answer. 4. Explain and demonstrate graphically that if the central bank pursues targeting a monetaryaggregate, it is likely to lose control over the interest rate. 5. In the market for reserves, the federal funds rate is equal to the interest rate paid on excessreserves. Explain and demonstrate graphically the effect of an open market sale on the federalfunds rate.
Below is the balance sheet for a bank. Under "Other" it has listed "$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)
You take $100 you had kept under your mattressand deposit it in your bank account. If this $100stays in the banking system as reserves and if bankshold reserves equal to 10 percent of deposits, byhow much does the total amount of deposits in thebanking system increase? By how much does themoney supply increase?
Below is the balance sheet for a bank. Under "Other" it has listed "$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)
What are the benefits and costs for a bank when itdecides to increase the amount of its bank capital?
Humongous Bank is the only bank in the economy. The people in this economy have 20 million in money, and they deposit all their money in Humongous Bank. Humongous Bank decides on a policy of holding 100 reserves. Draw a T-account for the bank. Humongous Bank is required to hold 5 of its existing 20 million as reserves, and to loan out the rest. Draw a T-account for the bank after it has made its first round of loans. Assume that Humongous bank is part of a multibank system. How much will money supply increase with that original 19 million loan?
Humongous Bank is the only bank in the economy.The people in this economy have $20 million in money,and they deposit all their money in Humongous Bank.a. Humongous Bank decides on a policy of holding100% reserves. Draw a T-account for the bank.b. Humongous Bank is required to hold 5% of itsexisting $20 million as reserves, and to loan outthe rest. Draw a T-account for the bank after ithas made its first round of loans.c. Assume that Humongous bank is part of amultibank system. How much will money supplyincrease with that original $19 million loan?
ou just deposited $4,000 in cash into a checking account at the local bank. Assume that banks lend out all excess reserves and there are no leaks in the banking system. That is, all money lent by banks gets deposited in the banking system. Round your answers to the nearest dollar. If the reserve requirement is 1212%, how much will your deposit increase the total value of checkable bank deposits? $ If the reserve requirement is 44%, how much will your deposit increase the total value of checkable deposits? $ Increasing the reserve requirement the money supply.
If the bank at which you keep your checking account isowned by foreigners, should you worry that your depositsare less safe than if the bank were owned by Americans?
Who are the end-users of banking? O a. Borrowers and government O b. Government and management O c. Depositors and borrowers O d. Depositors and management
1. A customer puts his money in the amount of 1,500,000 into a bank deposit. If these deposits are kept as bank reserves, then it is known that the bank has a reserve ratio of 5%. What is the total deposit in the banking system? And how much has the money supply increased? 2. A bank with a minimum reserve of 25% has a total bank reserve of 100,000,000 without any excess reserves.a. What is the money multiplier? What is the money supply in circulation?b. The central bank made a new policy in which the required reserves / minimum reserves fell to 20%. What is the impact on bank reserves and the impact on the money supply 3. Show through the diagram the impact of a decrease in the minimum wage on the balance of wages, labor supply, labor demand, and the number of unemployed! Explain! 4. The minimum reserve / reserve requirement set in a country is 20% assuming the bank does not keep excess reserves. The central bank has a goal of expanding the economy by increasing the money supply by 40…
Only typed answer and please don't use chatgpt Assume the commercial banking system has checkable deposits of $20 billion and excess reserves of $2 billion at a time when the reserve ratio is 25 percent. If the reserve ratio is lowered to 20 percent, we can conclude that the: Answers: bank now has excess reserves of $3.2 billion. bank now has neither an excess nor a deficiency of reserves. maximum money-creating potential of the banking system has been increased by $7 billion. Board of Governors has decided that the economy is experiencing a high rate of inflation.