Answer:
The effect of this proposal would cause <u>AN INCREASE IN</u> the value of M1.
Explanation:
M1 includes the value of all coins and bills in circulation + checking accounts + N.O.W. accounts (negotiable order of withdraw) + travelers' checks.
Currently the value of all pennies in circulation = 1.4 billion x $0.01 = $14 million. If their value is increased to 5 cents, then $14 million x 5 = $70 million.
$70 million is a lot of money for a person or a business, but for the economy it is not really a significant amount so its impact would be really small.
Answer:
See explanation section
Explanation:
The primary role of the banking system is to accept deposits from the general public so that the money can be given as a loan to the public in an effective way to foster the economy. It is the safest platform where people keep their money to get a bonus while people borrow money to continue operating.
Answer:
c. $360 increase in excess reserves and a $40 increase in required reserves
Explanation:
Required reserves is the amount of reserves that is required by the Central bank that banks should keep.
Required reserve = reserve ratio × deposit
= 0.1 × $400 = $40
Excess reserve is the amount of reserves kept in excess of the required reserves.
Excess reserve = Deposit - Required reserve = $400 - $40 = $360
I hope my answer helps you