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viva [34]
2 years ago
10

If bank reserves are equal to $2,000, the required reserve ratio is 10 percent, and banks make as many loans as they can, what w

ill be the upper limit of the money supply assuming no borrower withdraws currency and leaves the loan balance in the bank after a loan is created
Business
1 answer:
Katyanochek1 [597]2 years ago
8 0

The upper limit on the money supply assuming borrower withdraws currency and leaves the loan balance in the bank after a loan is created is $200,000.

<h3>What is the upper limit on the money supply?</h3>

The first step is to determine the total amount of deposits in the banks.

Deposits = resereves / reserve ratio

2000 / 0.1 = $20,000

Upper limit on money supply = deposits / reserve ratio

20,000 / 0.1 = $200,000

To learn more about reserve ratio, please check: brainly.com/question/6831267

You might be interested in
Required reserves are defined as_________-. A. currency plus travelers checks plus demand deposits. B. the difference between le
cluponka [151]

Answer:

D. the value of reserves that a depository institution must hold in the form of vault cash or deposits at the Fed.

Explanation:

Required reserves is the value of reserves that a depository institution must hold in the form of vault cash or deposits at the Fed.

Excess reserve are deposits held at Federal Reserve district banks plus vault cash.

M1 is currency plus travelers checks plus demand deposits.

I hope my answer helps you.

5 0
3 years ago
In a 1988 study, Fama and French found that the return on the aggregate stock market was __________ when the dividend yield was
Lisa [10]

Answer:

A. higher

Explanation:

Fama And French did the risk factor study on stock, which clearly stated that when there is a high dividend yield then the stocks would perform good even in the market.

thus, this clearly reflects that when the market is high for stock returns then the dividend yield is also high.

This is basically the proportional reaction, as when the stock return is higher whether in terms of value addition or cash returns then only the dividend return would also be higher.

Correct option in this case will be:

A. Higher.

6 0
3 years ago
Ray's Pizzeria is considering the addition of a 5th worker if this increases profit. Pizza sales increased from 300 per day to 3
Anika [276]

Answer:

60 pizzas

40 pizzas

Explanation:

Marginal product measures the change in output as a result of a change in input by one unit

Marginal product = change in output / change in input

Marginal product for the 4th worker

Change in output = 360 - 300 = 60 pizzas

Change in input = 4 - 3 = 1 worker

Marginal product = 60 / 1 = 60

Marginal product for the 5th worker

Change in output = 400 - 360 = 40 pizzas

Change in input = 5 - 4 = 1

Marginal product = 40 / 1 = 40

It can be seen that marginal product decreased from 60 to 40 when the 5th worker was added. This illustrates diminishing marginal returns.

The law of diminishing returns says as more units of a variable input is added to a fixed income of production, output might increase at a point but after some time total output would increase at a decreasing rate and marginal product would be decreasing.

6 0
2 years ago
Greg has developed an automobile engine that runs efficiently for up to three hours on a single russet potato. His friends have
natulia [17]

Answer:

Correct option is (a)

Explanation:

For any venture to be successful, it starts with a vision or idea. In this case, Greg is confident that he will be able to convince US Car manufacturers to purchase his fuel efficient car even though his friends were doubtful if his product will be accepted by car manufacturers.

He also had a clear vision as his goal was to make US economy energy efficient. Vision is to have a positive outlook regarding future.

It can be inferred that Greg has both vision and confidence

4 0
3 years ago
Read 2 more answers
When bonds are converted into common stock____.
nexus9112 [7]

Answer:

When bonds are converted into common stock____.

a. the market price of the stock and the bonds is ignored when recording the conversion.

Explanation:

This is because the conversion price, which is the price at which the convertible bond is converted into the common stock of the entity, is usually set initially when the conversion ratio is first decided on.  Therefore, the market prices of the stock and the bonds are not taken into account when the conversion recording is being done.

4 0
3 years ago
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