Answer:
20; $1 billion
Explanation:
Given that,
New funds = $20 billion
Required reserve ratio = 5%
Money multiplier:
= 1/Required reserve ratio
= 1/0.05
= 20
Initial money increase by:
= Funds wants to be in the money supply × Required reserve ratio
= $20 billion × 5%
= $1 billion
Therefore, the Fed should initially increase $1 billion in the money supply.
The applicable law in the instance when Austin, Texas decides on imposing a new tax code on business owners within the city is <u>B. Public law.</u>
<h3>What is Public Law?</h3>
Public law concerns all matters pertaining to the relationship between the city government and legal entities or persons residing or doing businesses in the city. Public law, therefore, governs the relationship between the city and its subjects, which include individuals and organizations within the city.
<h3>Answer Options:</h3>
A. Private law
B. Public law
C. Federal law
D. Criminal law
E. State law
Thus, the applicable law in this instance is public law and not private, federal, criminal, or state laws.
Learn more about public laws at brainly.com/question/26332646
Answer:
$380 million
Explanation:
Given that,
Deposits = $120 million
Required reserve ratio = 20 percent
Total bank reserves = $100 million
Required reserve ratio refers to the portion of deposits that is kept with the reserve bank.
Required reserves:
= Deposits × Required reserve ratio
= $120 million × 0.2
= $24 million
Excess reserves:
= Total reserves - Required reserves
= $100 - $24
= $76
So, there is a excess reserves in this economy.
Money multiplier = 1/Required reserve ratio
= 1/0.2
= 5
Therefore, the total money creation potential of this deposit is as follows:
= Excess reserves × Money multiplier
= $76 × 5
= $380 million
Hence, an increase in deposit creation by $380 million.
Answer:
1
Explanation:
Given that,
Weighted average cost of capital = 7%
After-tax cost of debt = 4 percent
Cost of equity = 10 percent
Let the debt of this firm be x, then the equity will be (1 - x),
wacc = (After-tax cost of debt × Debt) + (Cost of equity × Equity)
7% = (4% × x) + [10% × (1 - x)]
0.07 = 0.04x + 0.1 - 0.1x
0.07 = 0.10 - 0.06x
0.06x = 0.10 - 0.07
0.06x = 0.03
x = 0.5
Therefore, if the debt is 0.5 then the equity is 0.5.
Hence, the debt to equity ratio will be:
= 0.5 ÷ 0.5
= 1
The debt-equity ratio is 1 for the firm to achieve its targeted weighted average cost of capital.
