Answered: $100 for your birthday and you deposit…

Business

Economics

$100 for your birthday and you deposit that $100 into your checking account at the local bank. The reserve ratio is 10%

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter12: Money, Banking And The Financial System

Section: Chapter Questions

Problem 8WNG

See similar textbooks

Related questions

Q: Assume that the production function for output is given by Y = BK¤T³ EVL¹-α-B³-y. Where T is a fixed…

A: A production function is an economic concept that shows the relationship between the inputs used in…

Q: The table below shows some of the costs incurred at Bill's Brickworks. Complete the table. If your…

A: Introduction Production cost is the overall expense a company makes to either create a good or…

Q: Calculate Rian's marginal revenue and marginal cost for the first seven cardigans they produce, and…

A: Total cost is the TC of production, which includes both FC and VC. The cost necessary to manufacture…

Q: (10100,-89990)

A: USA/Fiji No-tax (Eliminated due to being dominated by the 'Tax') Tax No-tax 10000, -99989 10100,…

Q: Labor (Number of workers) 01 02 0 3 0 1 2 04 3 Refer to Table 18-2. The table shows the number of…

A: The firm maximizes profit by hiring the number of workers at the point where marginal product of…

Q: rbc model

A: The economy is viewed in this model as a production function, with output depending on both labour…

Q: 4. A loan of P8,000 has an interest of 10% compounded annually is to be paid by equal annual…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: 31. The market structure for a software product called Wrowserware is oligopoly (more precisely,…

Q: O a. $1,250 b. $2,500 c. $625 d. $5,000 C.FS F5 PRICE F6 300 F7 250 200 150 100 50 25 F8 50 Refer to…

A: The larger the producer surplus, the greater the incentive for producers to continue supplying goods…

Q: The table below shows the market for mandarin oranges in the country of Preswar. Quantity Demanded…

A: Equilibrium is where the demand curve intersects the supply curve. Effective price floor is when it…

Q: Qus 1 Suppose you are the manager of a SDT Start up firm operating in a competitive market. Your…

A: Profit is the monetary benefit that a company or person experiences after deducting all costs and…

Q: Suppose that disposable income, consumption, and saving in some country are $200 billion, $150…

A: MPC is the marginal propensity to consume. It is calculated as the change in Consumption divided by…

Q: Explain and illustrate how a fiscal expansion can be accomodated by a monetary expansion in IS/LM…

A: In the IS/LM framework, fiscal policy refers to changes in government spending and taxation, while…

Q: Lagatt Green is a monopoly beer producer and distributor operating in the hypothetical economy of…

A: In monopoly , Profit is maximized where MR = MC MR is the marginal revenue MC = Marginal Cost…

Q: Differentiate the function. 기 dx y= || 6 30

A: The derivative of a function refers to the rate of change. The derivative of the variable “y” with…

Q: The price of crude oil increased to its highest level due to conditions which impacted supply.…

A: OPEC (Organization of the Petroleum Exporting Countries) is an international organization that was…

Q: 1. Explain and show graphically how monetary and fiscal policies can be used in the IS-LM framework.…

A: In the IS-LM framework, monetary policy refers to actions taken by the central bank to influence the…

Q: 2. A diesel generator for a manufacturing firm cost P100,000. Installation cost is worth P5,000.…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: QUESTION 5 Consider the Cournot model of quantity competition. In the Nash equilibrium, firms always…

A: In a competitive game, Nash equilibrium describes a condition in which each player may optimise…

Q: A bakery works out a demand function for its chocolate chip cookies and finds it to be…

A: Price workability is the conception that explains the revision in price leads to an alteration…

Q: The desired reserve ratio is 10 percent of deposits, and the currency drain ratio is 1 percent of…

A: Money multiplier is used to calculate the value of change in money supply. Change in money supply…

Q: EXPANSIONARY AND RECESSIONARY GAPS Ans wer the following questions on the basis of the following…

A: Aggregate supply determines the total value of the output in which firms can supply at different…

Q: 1. What is the role of the Budget Department in the budget process?

A: An annual budget is a common example of a financial plan that details anticipated income and…

Q: The banking system in Chuckistan has limited reserves, and the central bank of Chuckistan has become…

A: Introduction: Reserve requirement is the percentage of deposits that banks are required to hold in…

Q: Consider the market for different Apartments. Use the chart below to answer the following questions.…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: The realization that only a small portion of criminals commit the majority of crimes suggests that,…

A: The additional expense incurred by creating one extra unit of output is known as marginal cost (MC).…

Q: Given the following table: OUTPUT 0 123456 Part 1: The TVC of producing 4 units of output is Number…

A: Total cost is the sum of fixed cost and variable cost. Fixed cost are the cost that doesn't change…

Q: how does small denomatons coins given by the gobernment affect liquidity

A: Small denomination coins are coins with a low face value that are issued by governments as a means…

Q: Current Attempt in Progress Galvanized Products is considering purchasing a new computer system for…

A: The value that represents the aggregation of all the cash flows related to the current value of the…

Q: 44. In a perfectly competitive market for a good with a downward sloping demand curve and an upward…

A: The measure that depicts benefits or costs that are not being not received or incurred financially…

Q: Refer to the information provided in Figure 4.6 below to answer the question(s) that follow.…

A: The dead-weight loss refers to the loss of consumer surplus and producer surplus. The decline in the…

Q: Jack and Jill both obey the two-period Fisher model of consumption. Jack earns $200 in the first…

A: The two-period Fisher model of consumption is a basic economic model that helps to explain how…

Q: oh dewing aparatie en ang de grem perde VISI LABOR True then corded t septents we need the posay…

A: The production function in economics states the functional relationship between inputs and outputs.…

Q: a) Given that a firm has a production technology, y= (x² + x²) ²³/₁ derive the MRTS12

A: The production function shows the rrealtionship between the input used and the outtput produced.…

Q: Please no written by hand solutions complete a STEP (social, technological, economic, political)…

A: The technique of analyzing how people, businesses, and entire economies behave economically is known…

Q: In Salop’s model of entry deterrence, the unconstrained monopoly earns profits (in present value…

A: A) We expect 2v1 to be less than 100 because when the market is shared between two firms, each firm…

Q: 1. Problems and Applications Q1 Suppose the economy is in a long-run equilibrium, as shown in the…

A: Aggregate demand is a sum of consumption spending, investment spending, government purchases and net…

Q: Suppose Japan has a GDP of $2 trillion, and that its national saving rate is 16%. Assume Japan is an…

A: GDP is the gross domestic product. GDP is the money value of all the goods and services produced…

Q: Instructions: Enter your answer as a whole number. If you are entering a negative number include a…

A: Marginal propensity to consume (MPC) refers to the proportion of aggregate raise spent for the…

Q: Two investment projects are being evaluated based on their payback periods. The first alternative…

A: Payback Period: The amount of years required to repay the initial cash investment is known as the…

Q: In 1983, the Reagan Administration introduced a new agricultural program called the Payment-in-Kind…

A: The free market is an economic system that depends on supply and demand with almost no government…

Q: Refer to Figure 13-2. Suppose that these diagrams refer to Canada. Which shift shows the effect of a…

A: In this case, we have to discuss about the voluntary export restriction. Voluntary export…

Q: Price competition in an oligopoly leads to a high probability of : a. higher prices b. price…

A: An oligopoly is a market structure characterized by a small number of large firms that dominate the…

Q: Real-Time Data Analysis Exercise The following table shows the values for real potential GDP and…

A: Output gap is the difference between actual output and potential output

Q: If a consumer purchases a foreign-produced hair dryer at a department store, the value of the hair…

A: An import is a good or service that is produced in a foreign country and brought into a country for…

Q: A company produces very unusual CD's for which the variable cost is $ 15 per CD and the fixed costs…

A: Break-Even Point: The cost of production of any product involves the variable cost, which is…

Q: • From information about the computer firm XYZ activity as a monopoly on the market, give the…

A: Monopoly is a form of market structure in which a single firm sells a commodity for which there are…

Q: Figure 9-2 Price 0 0Q1 MC Q₂ Q3 Quantity MR Refer to Figure 9-2. What level of output will the…

A: In a monopoly market structure, There exists a single firm. The firm will produce where the MR…

Q: You are the company owner (UAE-based) and want to expand your business into the South Korean market.…

A: It is the chance or possibility that the investment in the business leads to some false results. It…

Q: Use the following information to answer the question below. Cloe is given $4 of pocket money to be…

A: Marginal utility is the utility derived from the consumption of an additional unit of good. Total…

Concept explainers

Required Reserve and Excess Reserve Analysis

A required reserve is an amount of cash that banks must keep with themselves, which is certain percentage of the deposits made by their customers. Required reserve is a percentage of the bank's deposits that the respective bank must have on each overnight. The percentage rate is set and determined by the nation’s central bank. It is important to have such funds accumulated to meet its uncertain obligations, sudden liabilities and withdrawals. Required reserve is also known as reserve ratio. Reserve ratio is an important tool to control the money supply.

Question

Suppose your grandma sends you $100 for your birthday and you deposit that $100 into your checking account at the local bank. The reserve ratio is 10%.

Based upon this deposit, how much have the bank's reserves have increased by and how much have the bank's checkable deposits have increased by?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Given Information

VIEW

Step 2: Deposit Multiplier

VIEW

Step 3: Increased deposit

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Suppose you inherited $257,000 cash from a bequest, and you decide to deposit it at your bank. Assuming the $257,000 is the only money supply in the economy, your task is to determine how much money your bank can create using the $257,000 you deposited. Show all your calculations The required reserve ratio is 3.5%. a. How much of the initial money supply can the bank give out as loans? If the recipient of the loan keeps the money at the same bank, what will be the total money supply in the economy? b. How much of the new money supply can the bank give out as loans? Will it increase or decrease the total money in the economy? By how much? c. Suppose the required reserve ratio increases by 4.5%, repeat steps in parts (a) and (b). What is the total money supply in the economy? Thank you so much!!
Jane deposits $175 into her bank, and the reserve requirement is 15 percent. How much is the excess reserve in dollars
Suppose the banking system does NOT hold excess reserves and the reserve ratio is 20%. If Sam deposits $500 cash into his checking account, how much can the banking system can increase the money supply by?
If you deposit $40 into a checking account, and your bank has a 10% reserve requirement, the bank's excess reserves will rise by $
If the required reserve ratio (RRR) in U.S. is 10 percent and you deposit $5,000, which is wired from your parents’ bank account in Germany to your checking account in the U.S. National Bank, then the change in the U.S. money supply eventually should be Group of answer choices a $45,000 increase. a $5,000 increase. no change. a $50,000 increase.
Suppose that you find $100 dollars and you deposit it into your bank account as a checkable deposit. If the require reserve ratio is 20%, how much will the money supply increase due to the initial $100 deposit in the banking system.
Suppose you deposit $700 cash into your checking account. By how much will the total money supply increase as a result when the required reserve ratio is 0.20? The change in the money supply is: $ (enter your result rounded to the nearest dollar).
Suppose First Main Street Bank, Second Republic Bank, and Third Fidelity Bank all have zero excess reserves. The required reserve ratio is 25%. The Federal Reserve buys a government bond worth $1,800,000 from Felix, a customer of First Main Street Bank. He deposits the money into his checking account at First Main Street Bank. Now, suppose First Main Street Bank loans out all of its new excess reserves to Deborah, who immediately writes a check for the full amount to Carlos. Carlos then immediately deposits the funds in his checking account at Second Republic Bank. Then Second Republic Bank lends out all of its new excess reserves to Larry, who writes a check to Janet, who deposits the money in her account at Third Fidelity Bank. Finally, Third Fidelity lends out all of its new excess reserves to Megan. Assume this process continues, with each successive loan deposited into a checking account and no banks keeping any excess reserves. Under these assumptions, the $1,800,000 injection…
Suppose you win on a scratch-off lottery ticket and you decide to put all of your $3,500 winnings in the bank. The reserve requirement is 5%. How much maximum of new money will be created (maximum amount of new checking deposits created by the banking system) as a result of your bank deposit? Hint: do not count your initial deposit as part of increase. Number $70000 ☐ ☐ Incorrect. The bank can only loan out excess reserves. Calculate the excess reserves after the lottery winnings were deposited, than multiple that number by the money multiplier. Which events could cause the increase in the money supply to be less than its potential? Check all that apply. Some loan recipients choose to hold some cash instead of depositing all of it in banks. All money loaned out is deposited back into the banking system. Banks decide to keep some excess reserves on hand. Banks choose to loan out all excess reserves.
Suppose you deposit $1,900 cash into your checking account. By how much will checking deposits in the banking system increase as a result when the required reserve ratio is 0.50? The change in checking deposits is equal to: $ (enter your result rounded to the nearest dollar).
Say that First Commercial Bank has reserves of $100, loans at $400 and checkable deposits of $500. The required reserve ratio is 10%. If the bank has a deposit outflow of $40, is the bank in violation of the required reserve ratio? What is the maximum amount of deposit outflow the bank can sustain without violating the ratio?
a) Suppose that Tk.10,000 in new taka bills (never seen before) falls magically from the sky into your hands. What are the minimum increase and the maximum increase in the money supply that may result? Assume the required reserve ratio is 10 percent.b) Suppose you receive Tk. 10,000 from your grandmother and deposits the money in a saving account. your grandmother gave you the money by writing a check on her saving account. Would the maximum increase in the money supply still be what you found it to be in part a) where you received the money from the sky? Why or why not?c) Suppose that instead you getting Tk. 10,000 from the sky or a check through your grandmother, you get the money from your mother who had buried it in a can in her backyard. In this case, would the maximum increase in the money supply be what you found it to be in part a)? Why or why not?