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AlexFokin [52]
3 years ago
10

Consider the following information about a banking system: new currency deposited in the system = $40 billion, legal reserve rat

io = 0.20, excess reserves prior to the currency deposit = $0. The $40 billion deposit of currency into checking accounts will create excess reserves of
Business
1 answer:
Vlada [557]3 years ago
3 0

Answer:

The bank will create excess reserve of $200 billion

Explanation:

The question measures the size of credit expansion associated with the new currency deposit. the computation below shows how excess reserves can be computed.

Money multiplier              =   1 /Legal Reserve Ratio  = 1/0.2 = 5

Excess Reserve Created = A x (1 /Legal Reserve Ratio)

Where:                          A  = New currency deposit =  $40

       Legal Reserve Ratio = 0.20      

                                     

Excess Reserve Created = $40 x (1/0.2)  =  $40 x 5 =  $200 billion                                          

The legal reserve of 5 indicates that for every unit of money reserved by banks, they are able to create 5 units of same.

The money creation capability of the banking system as a whole is depends on the legal reserve ratio. Legal reserve ratio is a fraction of a bank deposit which the law requires them to hold. The bank can only lend the balance after deducting the legal reserve.

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In April, one of the processing departments at Terada Corporation had beginning work in process inventory of $37,000 and ending
Alborosie

Answer:

total cost to be accounted = $297000

Explanation:

given data

beginning work in process inventory = $37,000

ending work in process inventory = $43,000

costs added to production = $260,000

cost of units transferred out = $254,000

solution

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total cost to be accounted = ending work in process inventory + cost of units transferred out   ......................1

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3 0
3 years ago
Find the final amount of money in an account if $ 8 , 000 is deposited at 5 % interest compounded semi-annually and the money is
Vika [28.1K]

Answer: $12477.27

Explanation:

The formula to find the compound amount after t years (compounded semiannually) :-

A=P(1+\dfrac{r}{2})^{2t}

Given : Principal amount : P = $ 8,000

Rate of interest : r=0.05

Time : 9 years

Now, A=8000(1+\dfrac{0.05}{2})^{2\times9}

A=8000(1+0.025)^{18}=12477.2697417\approx\$12477.27

The final amount in the account will be $12477.27

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Consider This) Susie purchased a nonrefundable ticket to a soccer match for $20. It will cost her $10 worth of gas and wear and
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