A customer puts his money in the amount of 1,500,000 into a bank deposit. If these deposits are kept as bank reserves, then it is known that the bank has a reserve ratio of 5%. What is the total deposit in the banking system? And how much has the money supply increase?
2. A bank with a minimum reserve of 25% has a total bank reserve of 100,000,000 without any excess reserves.
a. What is the money multiplier? What is the money supply in circulation?
b. The central bank made a new policy in which the required reserves / minimum reserves fell to 20%. What is the impact on bank reserves and the impact on the money supply
3. Show through the diagram the impact of a decrease in the minimum wage on the balance of wages, labor supply, labor demand, and the number of unemployed! Explain!
4. The minimum reserve/reserve requirement set in a country is 20% assuming the bank does not keep excess reserves. The central bank has a goal of expanding the economy by increasing the money supply by 40 million.
a. If the central bank wants to use open market instruments, what steps will the central bank take by selling or buying government bonds? Explain!
b. How much government debt does the central bank need to buy or sell in order to increase the money supply by 40 million?

Answer rating: 100% (QA)

1 To calculate the total deposit in the banking system we can use the concept of the money multiplier The money multiplier represents the amount by which the money supply increases for every dollar de... View the full answer