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musickatia [10]
3 years ago
8

If the reserve ratio is 10 percent, banks do not hold excess reserves, and people hold only deposits and no currency, when the f

ed sells $10 million dollars of bonds to the public, bank reserves increase by $1 million and the money supply eventually increases by $10 million.
Business
1 answer:
tigry1 [53]3 years ago
5 0
<span>1. Suppose Oscar withdraws $100 from his checking account and deposits it into his savings account. This
transaction causes M1 to 
A. Increase by $100 and M2 to remain the same.
B. Decrease by $100 and M2 to remain the same.
C. Decrease by $100 and M2 to increase by $100.
D. Remain the same and M2 to increase by $100</span>B<span>2. Suppose Megan withdraws $75 from her savings account and deposits it into her checking account. This
transaction causes M1 to 
A. Increase by $75 and M2 to remain the same.
B. Decrease by $75 and M2 to remain the same.
C. Increase by $75 and M2 to decrease by $75.
D. Remain the same and M2 to increase by $75.</span>A<span>3. Suppose Jared takes $200 from his savings account and holds it as cash. The immediate result of this
transaction is that M2 
A. Increases by $200 and M1 remains the same.
B. Decreases by $200 and M1 remains the same.
C. And M1 do not change.
D. Remains the same and M1 increases by $200.</span>D<span>4. A single bank with $10,000 of reserves and a reserve ratio of 25 percent could support total transactions
account balances of at most 
A. $10,000.
B. $5,000.
C. $40,000.
D. $25,000.</span>C<span>5. A single bank with $20,000 of reserves and a reserve ratio of 5 percent could support total transactions
account balances of at most 
A. $400,000.
B. $1,000.
C. $100,000.
D. $20,000.</span>A<span>6. Initially a bank has a required reserve ratio of 20 percent and no excess reserves. If $5,000 is deposited into
the bank, then initially, ceteris paribus, 
A. This bank can increase its loans by $5,000.
B. This bank can increase its loans by $4,000.
C. Total reserves will increase by $4,000.
D. Required reserves will increase by $5,000.</span>B<span>7. Initially a bank has a required reserve ratio of 10 percent and no excess reserves. If $1,000 is deposited into
the bank, then, ceteris paribus, 
A. This bank can increase its loans by $900.
B. This bank can increase its loans by $1,000.
C. Total reserves will increase by $900.
D. Required reserves will increase by $1,000.</span>A<span>8. If total reserves for a bank are $12,000, excess reserves are $2,000, and demand deposits are $100,000, the
money multiplier must be 
A. 20.
B. 15.
C. 10.
D. 5</span>C<span>9. If the banking system has demand deposits of $100,000, total reserves equal to $15,000, and a required
reserve ratio of 10 percent, the banking system can increase the volume of loans by a maximum of 
A. $5,000.
B. $50,000.
C. $85,000.
D. $100,000.</span>A<span>10. Suppose a banking system has a required reserve ratio of 0.15. How much can the money supply increase in
response to a $1 billion increase in excess reserves for the whole banking system? 
A. $1 billion.
B. $150 million.
C. $15 billion.
D. $6.67 billion.</span><span>B</span>
You might be interested in
Bank reserves are $200, the public holds $1000 in currency, and the reserve-deposit ratio is 20%. What is the Value of Bank Depo
Alja [10]

Answer:

What is the Value of Bank Deposits?

bank deposits = bank reserves / required reserve ratio = $200 / 20% = $1,000

What is the Money Supply?

money supply = bank deposits + currency held by the public = $1,000 + $1,00 = $2,000

Suppose that the Fed sells $50 worth of bonds in an "open market sale." Assuming that the public does not wish to change the amount of currency it holds, what is the new money supply after this open market purchase?

if the FED sells $50 worth of bonds, money supply will decrease by $50 x (1 / 20%) = $50 x 5 = $250

total money supply = $2,000 - $250 = $1,750

6 0
3 years ago
Which one of these statements related to discounted payback is correct?a) the discounted payback period decreases as teh discoun
Free_Kalibri [48]

Answer:

A) the discounted payback period decreases as the discount rate increases

Explanation:

The discounted payback period is used to determine the profitability of an investment project.

A not discounted payback period is how long does it take for the cash flows of a project to recoup the investment's cost without considering the value of money in time. By applying a discount to the cash flows, the discounted period will more accurately measure the length of time needed to recoup an investment using current dollars.

The higher the discount rate, the longer it will take for the cash flows to cover the investment's cost, so if the discount rate lowers, then the discounted payback period will be shorter.

5 0
3 years ago
A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as p
Jet001 [13]

Answer:

Students believe that if the initiative does not happen, the funds for the initiative will not be spent elsewhere.

Explanation:

The visual appearance is both non rival and non excludable I.e. Pure public good

Benefit is 17*490=8.330

Benefit is greater than cost so college administrators should undertake the beautification initiative

7 0
3 years ago
Barbara owns 40% of the stock of Cassowary Corporation (a C corporation) and 40% of the stock of Emu Corporation (an S corporati
vodomira [7]

Answer:

$ 48,000

$3,200

Explanation:

Since C corporations are separate taxable entities, Cassowary Corporation will report the operating income and tax-exempt income. An S corporation is a tax reporting entity. Therefore, Barbara will report ordinary business income of $ 48,000 and tax-exempt $ 3,200.

Reason -

Business income = 120,000×40%

                           = 120,000.\frac{40}{100}

                           = $48,000

⇒Business income = $48,000

Tax-exempt = 8,000×40%

                   = 8,000.\frac{40}{100}

                   = $3,200

⇒Tax-exempt = $3,200

7 0
2 years ago
What type of interest will earn you the most amount on your money?
kirill [66]
1=A
2=D
3=C
4=A
5=C
6=C
7=D
8=A
9=C
10=D
11=C
12=A
13=C
14=B

8 0
3 years ago
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