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mr Goodwill [35]
2 years ago
9

Suppose that a bank has ​$80 in checkable​ deposits, reserves of ​$15 ​, and a reserve requirement of​ 10%. Also assume that the

the bank suffers a ​$6 deposit outflow. If the bank chooses to borrow from the Fed to meet its reserve​ requirement, then the bank would need to borrow ​$nothing . ​(Round your response to the nearest two decimal​ place.)
Business
1 answer:
vazorg [7]2 years ago
8 0

Answer: See explanation

Explanation:

Based on the information given in the question, the amount of borrowing that's required will be:

= [ rr * ( D - O)] - (R-O)

where,

rr = reserve requirement = 10% = 0.1

D = checkable deposits = $80

R = reserves = $15

O = deposits outflow = $6

= [ 0.10 × ($80 - $6)] - ($15 - $6)

= [ 0.10 × $74 ] - $9

= $7.4 - $9

= -$1.60

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The Correct answer choice for question 1 is : <u>Federal Reserve Banks</u>

<h3>What is Federal Reserve Banks?</h3>

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The Correct answer choice for question 2 is : <u>Buy government securities</u>

<h3>What is Recession?</h3>

A recession is a business cycle recession which occurs in a general slowdown in financial activity. Macroeconomic indicators such as GDP, finance spending, capacity utilization, household income, business profits, and inflation fall, while failures and the unemployment rate rise.

Therefore, we can conclude that the correct option of 1 is (B) and 2 is (A).

Your question is incomplete, but most probably your full question was:

1. Which of the following institutions makes up the largest part of the Federal Reserve System organization?

A. Board of Governors

B. Federal Free Market Committee

C. Federal Reserve Banks

D. Member banks and other depository institutions

2. If the United States falls into a recession, which action would the Federal Reserve take to encourage employment?

A. Buy government securities

B. Increase reserve requirements

C. Raise federal funds and prime rates

D. Sell government securities

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7 0
2 years ago
The government tax for a sole proprietorships and a partnership is classified under
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Answer:

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7 0
3 years ago
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In the past few years, the demand for donuts has decreased. this would be illustrated by a change from?
zepelin [54]

The decrease in demand would be illustrated by a change from A to C.

<h3>What will be the change?</h3>

The demand curve is a downward sloping curve that shows the relationship between price and the quantity demanded. There is a negative relationship between price and quantity demanded.

A change in demand is caused by other factors other than the price of the good. Other factors include a change in income, a change in consumer taste or a change in the price of substitute goods.

When there is a change in demand, the demand curve would shift either to the right or to the left. When demand decreases, the demand curve would shift to the left. When demand increases, the demand curve would shift to the right.

Since, the demand for donuts have decreased, the demand curve would shift to the left. This would be a shift from A to C.

Please find attached the complete question. To learn more about the demand curve, please check: brainly.com/question/25140811

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3 0
1 year ago
The Taylor rule specifies how policymakers should set the federal funds rate target. Suppose that U.S. real GDP rises 1% above p
VladimirAG [237]

Answer:

FED raise the federal funds rate target by 0.5%

FED raise the federal fund rate target by 2%

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Taylor Rule states that Federal Funds should raise rates when inflation rises. When Gross domestic products growth of a country is high and above potential level then FED should raise rates. When inflation rises by 1% above target level then federal funds should raise FED by 2%.

6 0
3 years ago
In its 20X3 financial statements, Cris Co. reported interest expense of $85,000 in its income statement and cash paid for intere
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Answer:

The answer is: D) $32,000

Explanation:

In 20x3, Cris. Co. paid in cash $68,000 for interest, including $15,000 of interest from 20x2.

The amount of cash paid for 20x3 interests = $68,000 - $15,000 = $53,000

Interest payable = interest expense 20x3 - cash paid for 20x3 interests

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