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Novosadov [1.4K]
3 years ago
8

A bank currently has $50 million in deposits, $6 million in cash in the vault, $4 million on deposit with Fed, and $5 million in

government securities. The reserve ratio is 20 percent. A new deposit is made million. What is the maximum size loan the bank can make once the check clears?
a.$800,000
b.$5.8 million
c.0
d.$1 million
Business
1 answer:
yuradex [85]3 years ago
8 0

Answer:

A) $800,000

Explanation:

Since the current reserve ratio is 20%, and the bank has no excess reserves, then the maximum it can lend if it receives $1 is $800,000.

The bank has currently $50 million in deposits and $10 million in reserves ($6 million in cash and $4 million in the Fed), so its reserves are exactly 20% of its total deposits. So if any new deposits are received, the bank will have to keep as reserves 20% of it (= $1,000,000 x 20% = $200,000).

This type of banking system is called the fractional banking system because banks are only required to keep a fraction of the money they receive as deposits and they can lend the rest to other clients.

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Answer:

B. 20.0% and 35.0%

Explanation:

Jett Co.'s Average tax rates for 2015 = Income taxes paid / Taxable income

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A firm in the market for designer jeans has some degree of monopoly power. The demand curve it faces has a price elasticity of d
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A rule of thumb is used to determine if the monthly rent earned from a piece of investment property will exceed that property's monthly mortgage payment.

Using the rule of thumb pricing the profit-maximizing price of a monopoly firm is = P = MC/1+(1/Ed)

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Monopoly power (also known as market power) refers to the ability of a company to charge a price higher than its marginal cost. Monopoly power usually exists when demand is less elastic and barriers to entry are large.

There are three main sources of monopoly power: (1) price elasticity of demand (Ed), (2) number of companies in the market, and (3) interaction between companies. The price elasticity of demand is the most important determinant of market power for price rules: L = (P – MC) / P = -1 / Ed.

Learn more about monopoly power here: brainly.com/question/13113415

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