Suppose that you deposit $8,000 in your bank and the required reserve ratio is 15 percent. The maximum loan your bank can make as a direct result of your deposit is: (enter a whole number)

Q: Suppose that Second Republic Bank currently has $150,000 in demand deposits and $97,500 in…

A: The bank has the demand deposits of $150,000 and the outstanding loan amount of $97,500. It is also…

Q: Suppose you deposit $1,900 cash into your checking account. By how much will checking deposits in…

A: The correct answer is given in the second step.

Q: The Bank of Romovia, which is the highest financial institution in Romovia, has bought treasury…

A: Here, it is given that The Bank of Romovia is the highest financial Institution of Romovia due to…

Q: Suppose the federal funds rate is not close to zero, risk spreads are roughly constant so that…

A: The Federal Reserve uses monetary policy to change the amount of money in the economy through open…

Q: Assuming a required reserve ratio of 5%, interest rate on reserves of 1%, and interest rate on loans…

A: Below is the given values: Required reserve ratio = 5%Interest rate on reserve = 1%Interest rate on…

Q: If a Bank accepts a deposit of $1,000 and the required reserve ratio is 20%, how much can the Bank…

A: When a deposit is made in the bank, the bank should hold a certain percentage of deposits as…

Q: Assume that the Required Reserve Ratio is 20% for all the banks. Second National Bank is capable of…

A: Given, Reserve Ration 20%   Below is the calculation-

Q: In the mid 1800's, grain sellers in Chicago would deliver their grain to warehouses and receive a…

A: The currency that has been established as money, has no use or intrinsic value and is made legal…

Q: If all banks operate under a full reserve system, how much money is created by the banking system…

A: 1) Under the full reserve system, the bank will serve as an intermediary for the people whose…

Q: Suppose the reserve ratio for a given bank is 50%. If I deposit $100 in that bank, then will be…

A: Here, we calculate the given as follow;

Q: A reserve requirement of 10 percent means a bank must have at least $300 of reserves if its…

A: Reserve requirement is the minimum amount held in the form of liquid assets by the banks.

Q: Suppose that Serendipity Bank has excess reserves of $8,000 and checkable deposits of $150,000. If…

A: Excess reserve= $8000

Q: Stephanie deposits $500,000 in Bank of America. Assuming that banks lend out everything that they…

A: Total Deposit = $500,000Required Eeserve = 14%Intrest rate = 2%

Q: Assume that banks are able to lend out 85 cents on every dollar deposited, and a bank receives…

A: Note:- Since we can only answer up to three subparts, we'll answer the first three. Please repost…

Q: The rate of interest charged by the Federal Reserve to member banks for reserves borrowed from the…

A: The Federal reserve is the central banking authority of United States that keeps stability in the…

Q: Suppose a credit union has checkable deposits of $600,000 and the legal reserve ratio is 20 percent.…

A: Checkable deposits = $600,000 Legal reserve ratio = 20% or 0.20 Excess reserves = $12000 If the…

Q: The Federal Reserve Bank purchases $12,000 worth of securities, and estimates that the resulting…

A: The reserve proportion is the bit of reservable liabilities that commercial banks should clutch,…

Q: Economics Consider the model of financial intermediation seen in Chapter 3. Money is denoted by M,…

A: The money supply is the entire quantity of money in circulation, including cash, coins, and bank…

Q: Find the value of money creation when the initial deposit  are 20,000 and the legal reserve ratio is…

A:

Q: Suppose that Second Republic Bank currently has $200,000 in demand deposits and $130,000 in…

A: Reserves = demand deposits - outstanding loans Required Reserves = demand deposits * Reserve…

Q: Show a T-account for a bank when you make a deposit of $2000 into your checking account.Assume the…

A: T-account is a visual representation of double entry book keeping showing assets and liabilities.…

Q: Suppose in an economy, the initial deposits of $400 million lead to the creation of total deposit…

A: Given:  Initial Deposits = $400 million Total Deposit = $4000 million Money Creation Process is the…

Q: If the economy were encountering a severe recession, such as the Great Recession of 2007-2009 or the…

A: If the economy were encountering a severe recession, such as the Great Recession of 2007-2009 or the…

Q: In the market for reserves, assume that the federal funds rate is 4.5%, the discount rate is at 5%.…

A: In the Reserve market, a discount rate is the interest rate that the central bank charge from the…

Q: With an initial depost of $1000 and a reserve requirement of 4%, what is the total amount of money…

A: here we calculate amount creation by multiplier which are as follow-  Multiplier is depend upon the…

Q: The accompanying table gives data for a commercial bank or thrift. If the legal reserve ratio falls…

A: Reserve ratio is the mandatory holding that the banks in the country should hold. It is the…

Q: Explain the two components of legal reserve ratio in an economy?

A: According to the given question In simple words we can say that legal reserve ratio refers to the…

Q: Suppose a bank has $100 million in checking account deposits with no excess reserves and the…

A: Required Reserve ration is the minimum amount which is necessary for the bank in order to fulfill…

Q: And that is quite alright, says the SA Reserve Bank, as custodian of the rules intended to manage…

A: Reserve Bank is the central bank of country. It is responsible to maintain financial stability in…

Q: Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 12…

A: Level of Deposit = current reserve - excess reserve amount/ reserve requirement.

Q: The following graph shows a hypothetical demand function for federal funds. Currently, the total…

A:

Q: Consider the following situation in the Canadian banking system: •The Bank of Canada purchases $5…

A: The formula for multiplier = 1/(0.20+0.05) = 4 So, the increase in money supply = 5 million *…

Q: Suppose you remove $1000 from under your mattress and deposit it in first national bank. Using a…

A: When customer deposits $1,000, it will increase the reserve of bank and lending capacity. . If the…

Q: What types of regulations commercial banks are subject to and why commercial banks are subject to…

A: It is very important to have a strong and well developed banking sector in order to maintain…

Q: Assume that the required reserve ratio is 20 percent. What is the maximum increase in money supply…

A: Reserve ratio = 20 % Increase in excess reserves = 50000 $ Money multiplier = 1 / reserve ratio = 1…

Q: If the U.S. government has easy (cheap) access to foreign savings, through what mechanism will…

A: The government spends money in the economy to boost the economy. It finances its spending through…

Q: The assets of a commercial bank may include all of the following except:   Question 28 options:…

A: The depository institutions are those financial institutions which accept monetary deposits from…

Q: Suppose the Federal Reserve decided to sell $35 billion worth of government securities in the open…

A: Money multiplier:Money multiplier can be calculated as follows:

Q: Refer to the information provided in Scenario 10.1 below to answer the questions that follow.…

A: 40. In the case of the bank no. 1  New deposit = $100,000 Required reserve = $5,000 Required reserve…

Q: What is the main rationale behind paying negative interest rates to banks for keeping their deposits…

A: Negative interest rate on bank’s deposit’s mean to encourage banks to diversify their money for more…

Q: If the Federal Reserve buys bonds from commercial banks, what will happen to the level of excess…

A: The Federal Reserve uses the open market operation tool to increase or decrease the money supply in…

Q: Assume that banks are able to lend out 85 cents on every dollar deposited, and a bank receives…

A: Amount bank are able to loan out=85 cents Initial deposits= $9000 1) If reserve requirement is…

Q: You have following information on the Bank of Morrisland: it currently holds a total of $150 million…

A: Introduction We have information of Bank of Morrisland. Bank have total check deposits = $150…

IS-LM-PC Analysis

The IS (Investment Saving), LM (Liquidity Preference- Money Supply), and PC (Philips Curve) is the model that looks at the dynamics of output and inflation. It takes into account the central bank policy decision to adjust the inflation and real interest rate in the economy. It enables the economist to weather to priorities between employment and inflation rate analyzing the model. It is a practice-driven approach adopted by economists worldwide.  

IS-LM Analysis

The term IS stands for Investment, Savings, and LM stands for Liquidity Preference, Money Supply. Therefore, the term IS-LM model is known as Investment Savings – Liquidity preference money Supply. This model was introduced by a Keynesian macroeconomic theory which shows the relationship between the economic goods market and loanable funds market or money market. In other words, it shows how the market for real goods interacts with the financial markets to strike a balance between the interest rate and total output in the macroeconomy. This particular model is designed in the form of a graphical representation of the Keynesian economic theory principle. The output and money are the two important factors in an economy.