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hodyreva [135]
3 years ago
12

On January 10, 2017, a man in Lebanon, Virginia, frustrated with the DMV bureaucracy, paid his DMV bill with 300,000 pennies tha

t he carted into the DMV office in five wheelbarrows. The DMV had to count all these pennies and deposit them into the DMV bank account. After the DMV deposit and assuming a reserve requirement of 6 percent, calculate the initial change in Instructions: Enter your responses as a whole number. a. Money supply. b. Deposits. c. Total reserves. d. Excess reserves. e. Calculate the cumulative change in the banking system in lending capacity
Business
1 answer:
Zepler [3.9K]3 years ago
5 0

Answer:

a. The initial change in the money supply would be $0

b. The initial change in deposits would be $3,000.

c. Total reserves will also increase by $3,000.

d. The excess reserves is $2,820.

e. Cumulative change = $47,009

Explanation:

(a)  Currency in circulation and bank deposits are both parts of the money supply.

So, when a man paid DMV with 300,000 pennies or $3,000 which DMV deposited into its account then in that case currency in circulation decreased by $3,000 and bank deposits increase by $3,000.

Since one component of the money supply is increasing while other is decreasing and that also by the same amount there will be no change in the money supply.

So,  the initial change in the money supply would be $0

(b)  DMV has deposited $3,000 into its bank account.

So,

Deposits will increase by $3,000.

Thus,

The initial change in deposits would be $3,000.

(c) Total reserves increases in the equal amount of the increase in deposits.

Deposits have increased by $3,000.

So,

Total reserves will also increase by $3,000.

Thus,

The initial change in total reserves would be $3,000.

(d)  New deposit created = $3,000

Reserve requirement = 6 percent

Required reserves created = $3,000 * 0.06 = $180

Excess reserves = New deposit - Required reserves = $3,000 - $180 = $2,820

The excess reserves is $2,820.

(e)  Reserve requirement = 6% or 0.06

Money multiplier = 1/Reserve requirement = 1/0.06 = 16.67

Calculate the cumulative change in the banking system in lending capacity -

Cumulative change = Excess reserves * Money multiplier

Cumulative change = $2,820 * 16.67 = $47,009

The cumulative change in the banking system in lending capacity would be $47,009.

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Answer with Explanation:

The introducing of newest technology would definitely have financial and operational implications. These implications are given as under:

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Sub-prime loan company is thinking of opening a new office, and the key data are shown below.
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To complete the above question, please see below:

Sub-Prime Loan Company is thinking of opening a new office, and the key data are shown below. The company owns the building that would be used, and it could sell it for $100,000 after taxes if it decides not to open the new office. The equipment for the project would be depreciated by the straight-line method over the project's 3-year life, after which it would be worth nothing and thus it would have a zero salvage value. No change in net operating working capital would be required, and revenues and other operating costs would be constant over the project's 3-year life. What is the project's NPV? (Hint: Cash flows are constant in Years 1-3.) 

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