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

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3 years ago

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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 7 percent, calculate the initial change in

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1 answer:

4vir4ik [10] · Answer 1 · 2022-09-26T20:55:20+03:00

Answer:

the requirements are missing, so I looked for them:

a. Money supply.
b. Deposits.
c. Total reserves.
d. Excess reserves.

a. $0

the coins are part of M1 money supply already, so it will not change it.

b. $3,000.

the DMV should deposit the pennies in their account account, therefore, total bank deposits will increase by 300,000¢ /100 = $3,000

c. $3,000

since bank deposits increase by $3,000, total reserves also increase by $3,000

d. $2,790

excess reserves = total reserves - required reserve ratio = $3,000 - ($3,000 x 7%) = $2,790