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valentinak56 [21]
2 years ago
7

In an open-market operation, the Fed buys $10 million of government bonds from individual investors. If the required reserve rat

io is 10 percent, the largest possible increase in the money supply that could result is $________ million, and the smallest possible increase is $_________ million.
Business
1 answer:
Fittoniya [83]2 years ago
6 0

Answer:

$100 million ; $10 million

Explanation:

Required reserve ratio (r) = 10%

Worth of bond = $10,000,000

The smallest increase can be thought of as being the $10million generated from open market operation and could be held by the bank as reserve.

To calculate the largest increase in deposit:

Money multiplier * deposit (worth of bond)

Money multiplier = (1 / reserve ratio)

Money multiplier = (1 / 0.1) = 10

Increase in deposit = 10 * $10,000,000 = $100,000,000 ( $100 million)

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Tomtit [17]

Answer:

$131,000

Explanation:

The computation of the ending balance of stockholder equity is shown below:

= Beginning balance of stockholder equity + net income - dividend paid + additional common stock issued

= $94,000 + $24,000 - $9,000 + $22,000

= $131,000

Therefore, the ending balance of stockholder equity is $131,000

We simply added the net income and the additional common stock issued and deduct the dividend paid to the beginning balance of stockholder equity so that the ending balance could come

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iris [78.8K]

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Explanation:

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Therefore the company will carry as liability at the end of the year a total of $921,000 - $270,000 = $651,000

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