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anastassius [24]
3 years ago
12

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amo

unt to $5 billion. What is the level of deposits?
Business
1 answer:
Rudik [331]3 years ago
8 0

Answer:

Total Deposits  = $4937.5 billion  

Explanation:

given data

currently in reserves = $400 billion

reserve requirement = 8 percent

reserves amount = $5 billion

solution

first we get  here Minimum Required Reserves that is express as

Minimum Required Reserves = Current Reserves - Excess Reserves    .........................1

put here value we get

Minimum Required Reserves = $400 billion - $5 billion

Minimum Required Reserves = $395 billion

and

Total Deposits is express as

Total Deposits  = \frac{minimum\ required\ reserve}{reserve\ required}      ......................2

Total Deposits  = \frac{395}{0.08}

Total Deposits  = $4937.5 billion  

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Assume a country's nominal GDP is $600 billion, government expenditures less debt service are $145 billion, and revenue is $160
kogti [31]

Answer:

a). Debt service payments=$21.6 billion

b). The nominal deficit=$6.6 billion

c). The government has a real budget surplus of $4.2 billion

Explanation:

a). Determine the debt service payments

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Debt service payments=Nominal debt×interest rate

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interest rate=6%=6/100=0.06

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b). Determine the nominal deficit or surplus

The nominal deficit can be expressed as;

nominal deficit/surplus=Revenue-(Interest on debt+Government expenditures)

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nominal deficit/surplus=160-(145+21.6)=160-166.6=-$6.6 billion

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3 years ago
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