1) Please answer the following questions regarding the banking system and the role of financial intermediaries: A) A bank receives $20 million dollars in new deposits and has a 10% reserve requirement. Indicate the way this transaction will be recorded on its balance sheet and on the balance sheets of the next two banks that stand to benefit from the $20 million dollars in new deposits. Also, what is the total amount of new money that will be created as a result of this new $20 million deposit? (10 points). B) Identify and briefly describe the major types of depository and nondepository financial intermediaries and the differences in how assets and liabilities are recorded on each balance sheet. Illustrate the differences by including one balance sheet example for each of the five main categories of intermediaries (15 points). C) Compare and contrast the federal funds rate and the open market operations methods of controlling and altering bank reserve requirements (10 points). D) True or False- A call option exposes the buyer of this contract to an unlimited level of risk. Briefly explain your results (5 points). OUnder Keynesian theory, the impact of overall economic activity was based on a unique. lationships between the savings and investment portions of the GDP identity. To detern w these relationships influence economic activity, please discuss the following major e Keynesian theory: Pescribe and illustrate, both graphically and algebraically, how Keynesian theory aha nalationchin hetween consumption, investment, Soming and mot t helps engilain all of the above. to buy or sell the une to buy or sell the underly The seller of an option contract has the the huyer of an option contract has the right, obligation bobligation, righe right, right obligation, obligation 17) What are the three major tools which the Federal Reserve Bank can us objectives pertaining to bank reserves established under the FOMC directi a) Reserve requirements, open market operations, the federal funds rate. b) The federal funds rate, reserve aggregates, the discount rate. c) Reserve requirements, open market operations, the discount rate. d) Money aggregates, reserve aggregates, long term interest rates. 18) An exchange rate policy which pegs a country's currency is know as a a) Fixed exchange rate policy. b) Cross-Currency exchange rate policy. c) Floating exchange rate policy. d) Managed floating exchange rate policy. 19) The marginal propensity to save can be calculated as propensity to consume can be calculated as while a) b; a b) (1-b); b c) a; b d) b; (1-b) 20) Which of the following bank assets would be considered the most lie a) U.S. government securities. 1) Please answer the following questions regarding the banking system and the role of financial intermediaries: A) A bank receives $20 million dollars in new deposits and has a 10% reserve requirement. Indicate the way this transaction will be recorded on its balance sheet and on the balance sheets of the next two banks that stand to benefit from the $20 million dollars in new deposits. Also, what is the total amount of new money that will be created as a result of this new $20 million deposit? (10 points). B) Identify and briefly describe the major types of depository and nondepository financial intermediaries and the differences in how assets and liabilities are recorded on each balance sheet. Illustrate the differences by including one balance sheet example for each of the five main categories of intermediaries (15 points). C) Compare and contrast the federal funds rate and the open market operations methods of controlling and altering bank reserve requirements (10 points). D) True or False- A call option exposes the buyer of this contract to an unlimited level of risk. Briefly explain your results (5 points). OUnder Keynesian theory, the impact of overall economic activity was based on a unique. lationships between the savings and investment portions of the GDP identity. To detern w these relationships influence economic activity, please discuss the following major e Keynesian theory: Pescribe and illustrate, both graphically and algebraically, how Keynesian theory aha nalationchin hetween consumption, investment, Soming and mot t helps engilain all of the above. to buy or sell the une to buy or sell the underly The seller of an option contract has the the huyer of an option contract has the right, obligation bobligation, righe right, right obligation, obligation 17) What are the three major tools which the Federal Reserve Bank can us objectives pertaining to bank reserves established under the FOMC directi a) Reserve requirements, open market operations, the federal funds rate. b) The federal funds rate, reserve aggregates, the discount rate. c) Reserve requirements, open market operations, the discount rate. d) Money aggregates, reserve aggregates, long term interest rates. 18) An exchange rate policy which pegs a country's currency is know as a a) Fixed exchange rate policy. b) Cross-Currency exchange rate policy. c) Floating exchange rate policy. d) Managed floating exchange rate policy. 19) The marginal propensity to save can be calculated as propensity to consume can be calculated as while a) b; a b) (1-b); b c) a; b d) b; (1-b) 20) Which of the following bank assets would be considered the most lie a) U.S. government securities