multiple answer. This question asks you to work through an open-market purchase of $4,000 in securities from Bank 1. The open-market operation then affects Bank 2, Bank 3, etc. There are- no leakages into currency, and banks always hold exactly 60% of deposits as reserves. Which of the following will be results of this OMO? Bank 2's Deposits will increase by $4,000 O Bank 3's Loans will increase by $640 O Bank 1's Loans will increase by $2.400 Bank 2's Reserves will increase by 60% O Bank 1's Deposits will increase by $2,400

multiple answer. This question asks you to work through an open-market purchase of $4,000 in securities from Bank 1. The open-market operation then affects Bank 2, Bank 3, etc. There are- no leakages into currency, and banks always hold exactly 60% of deposits as reserves. Which of the following will be results of this OMO? Bank 2's Deposits will increase by $4,000 O Bank 3's Loans will increase by $640 O Bank 1's Loans will increase by $2.400 Bank 2's Reserves will increase by 60% O Bank 1's Deposits will increase by $2,400

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter14: Banking And The Money Supply

Section: Chapter Questions

Problem 2.3P

See similar textbooks

Similar questions

Explain how to use an open market operation to expand the money supply.
The First National Bank has $100million in chequable deposits. The desired reserve ratio is 6%. (i) Calculate the Bank's reserves. Round your answer to two decimal places. (ii) The Bank desires to invest $30million in Treasury bills. The Treasury bills are currently trading at $4986.7 (including brokerage fee). How many Treasury bills does the Bank purchase? Round your answer to the nearest whole number. (iii) The Bank makes commercial loans of $25millions and lends $39.3million in mortgages. Calculate the amount of bank capital. (iv) Complete the balance sheet of the Bank. (v) Assume that there is a shortfall of reserves because depositors withdraw $5million from the Bank. Show the new balance sheet of the Bank. What can the Bank do to eliminate the shortfall of reserves?
This question asks you to work through an open-market sale of $7,000 in securities to Bank 1. The open-market operation then affects Bank 2, Bank 3, etc. There are no leakages into currency, and banks always hold exactly 60% of deposits as reserves.Which of the following will be results of this OMO?A) Bank 3's Reserves will decrease by $1,680B) Bank 2s Reserves will decrease by 60%C) Bank 3's Loans will decrease by $1.120D) Bank 1's Deposits will decrease by $4.200E) Bank 1's Loans will decrease by $4,200F) Bank 2's Deposits will decrease by $7.000
multiple answer. This question asks you to work through an open-market purchase of $4,000 in securities from Bank 1. The open-market operation then affects Bank 2, Bank 3, etc. There are no leakages into currency, and banks always hold exactly 60% of deposits as reserves. Which of the following will be results of this OMO? Bank 2's Deposits will increase by $4,000 Bank 3's Loans will increase by $640 O Bank 1's Loans will increase by $2,400 Bank 2's Reserves will increase by 60% O Bank 1's Deposits will increase by $2,400 O Bank 3's Reserves will increase by $960
Calculate Total Potential Deposit Creation given the following information. rr = ,12 Total Deposits: $6300 Total Reserves: $5500 Instructions: Please calculate to two decimal points. The margin of error is 0.10. do not use the $ sign in your answer
John deposits $1,800 into his checking account. If the reserve ratio is 10%, what are the required and excess reserves? Required reserves: $[ Excess reserve erves: $
Calculate the Required Reserves given the following information. rr = .11 Total Deposits: $7200 Total Reserves: $3500 Instructions: Whole numbers only. No margin for error
Total Reserves are $5 Trillion. Required Reserves are $2 Trillion. Calculate theExcess Reserves. Is it 2, 3, 5, or 7 Trillion?
2. Suppose the required reserve ratio is 11%, currency in circulation is $285 billion, the amount of checkable deposits is $600 billion, and excess reserves are $192 billion. Suppose the central bank is fighting rising inflation. The FOMC wants the money supply to fall by $80 billion. Assuming the ratios you calculated in question 1 are the same, calculate the size of the open market sale that would be needed to cause a change in the money supply of $80 billion.
19)Consider the following scenario. The currency deposit ratio is 0.5, the required reserve ratio is 0.25. The bank holds the required reserves, plus a little extra in case of a large withdrawal equal to e(R)=0.5-2R. Where R is the interest rate and it is equal to 12.5. The money supply is £600. Using the money multiplier approach calculate how many pounds worth of bonds would the Bank of England have to buy/sell in order to increase the money supply to £900? a. Sell bonds for an amount equal to $200. b. Buy bonds for an amount equal to $200. c. Buy bonds for an amount equal to $400. d. Sell bonds for an amount equal to $250.
Assume a target reserve ratio of 5%. A cheque for $45000 is drawn on an account in Bank B and deposited in a checking deposit in Bank A. Round your final answers to 2 decimal places, if necessary. Do not enter comma "," or dollar sign ($) while entering your answer. a. By how much have the excess reserves of Bank A increased? b. How much in the form of new loans is Bank A now able to extend to borrowers? c. By how much have reserves of Bank B decreased? d. By how much have excess reserves of Bank B decreased? e. By how much has the money supply increased? Check
Initial deposit is $10,000 Required Reserve Ratio is 20% Calculate: $ Multiplier Required Reserves Excess Reserves