Question: Problem 2: Balance Sheets & The Money Supply [7 Points] Suppose that the commercial bank reserve ratio is currently 20%. A bank begins with $2,000

Problem 2: Balance Sheets & The Money Supply [7 Points] Suppose

Problem 2: Balance Sheets & The Money Supply [7 Points] Suppose that the commercial bank reserve ratio is currently 20%. A bank begins with $2,000 of capital, and receives $20,000 in deposits. 10. Fill in the following table for the above bank? [2 points] Assets ($) Liabilities ($) Reserves Deposits Loans Capital Total Total Now suppose that 520,000 is the initial deposit into this banking system. Assume going forward that capital is equal to zero. Assume also that there is $50,000 of cash in the economy. The bank reserve ratio remains 20%. Cash drain is 0%. 11. How much deposits are generated across the entire banking system as a result of this initial $20,000 deposit? [2 points] 12. What is the total Money Supply in this economy? [1 point] Now suppose that the Government financial regulator drops the reserve requirements from 20% to 10%. 13. What is the change in the Money Supply as a result of this change in the reserve requirements? [2 points]

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Problem 2: Balance Sheets & The Money Supply [7 Points] Suppose that the commercial bank reserve ratio is currently 20%. A bank begins with $2,000 of capital, and receives $20,000 in deposits. 10....

1. The most common definition that central bankers use for price stability is_______ A) low and stable deflation. B) an inflation rate of zero percent. C) high and stable inflation. D) low and stable...

STATISTICS FOR DECISION MAKING Dr. Azar Abizada HOMEWORK 4 Due Date: Wednesday, March 11th class time Problem 1 (26 points): Be careful, each part of this question is independent of one another. a)...

Question 3 (1 point) What does the calculated amount of currency per person in Canada suggest? ( a) People do not trust banks b) People tend to hold too much currency. c) Most payments are made in...

Hello there can someone please help me answer questions: 1,3,4, & 11 part 1 as well as 4,6 & 7 part 2 Part1: 1)Assume that the following asset values (in millions of dollars) exist in Ironmania:...

What do you make of the present capital structure? What do you make of financial and operating results, including margins? What has been happening over time? To margins? To ratios? To EBITDA? How...

please do it correctly, otherwise I'll downvote. FORECASTING RESTRICTIONS There are two final problems. While Hood believes the company should use more debt, she recognizes that the final decision...

HELLO THERE, this question has two screenshots. First part of the question starts as the following " suppose Yukon Bank has the following simplified balance sheet and that the desired reserve ratio...

I am needing help determining how to up my group's score in year 8 in the GLO-BUS simulation. Below are the current standings after year 7 (I am in A Company): Product Design: AC Camera Marketing:...

Barretts Fashions forecast sales of $125,000 for the quarter ended December 31. Its gross profit rate is 20% of sales, and its September 30 inventory is $32,500. If the December 31 inventory is...

CASE The Casual Furniture Company The Casual Furniture Company (CFC) makes a variety of bookshelves for homes and businesses. The shelves come in various heights, widths, materials, and finishes....

Differentiate the function. f ( x ) = 6 x ln ( 7 x ) 6 x

Find the probability that fewer than 20 cars are white. Is 20 a significantly low number of white cars? Assume that 100 cars are randomly selected. Refer to the accompanying graph, which shows the...

Kelly Pitney began her consulting business, Kelly consulting P.C., on April 1, 2012. The accounting cycle for Kelly Consulting for April, including financial statements, was illustrated on pages...

On September 3, 2018, the Robers Company exchanged equipment with Phifer Corporation. The facts of the exchange are as follows: _________________________________ Robers' Asset ______ Phifer's Asset...

The following comparative income statement (in thousands of dollars) for the two recent fiscal years was adapted from the annual report of Speedway Motorsports, Inc., owner and operator of several...

Southern Company owns a building that it leases. The building's fair value is $1,400,000 and its book value is $800,000 (original cost of $2,000,000 less accumulated depreciation of $1,200,000)....

What are the legislative requirements for workplace WHS communication and consultation? Write your answer in 100-150 words

8. Based on the model in Fig. 10.2 in this chapter, analyse yourself and find out which cell you would place yourself in. Let another person in the group analyse you. Did he/she choose the same cell...

9. Take four examples from your own everyday life where someone has tried to influence you. Which of the seven influencing techniques mentioned above were used? Did they use any other influencing...

10. First test yourself and then let another member of the group test you in relation to the following questions. If deviations occur, discuss why this might be. What can the results of this test be...