Suppose that banks are required to hold reserves equal to at least 4 per cent of their deposits and hold no excess reserves. Also suppose that desired holdings of currency by the non-bank public are 3 per cent of deposits. The total money supply is $450m. From this information calculate the following. [Note: enter numerical values only. No words or symbols] The simple deposit multiplier (to one decimal place) The money multiplier (to one decimal place) The monetary base ($m to one decimal place) $ m

Suppose that banks are required to hold reserves equal to at least 4 per cent of their deposits and hold no excess reserves. Also suppose that desired holdings of currency by the non-bank public are 3 per cent of deposits. The total money supply is $450m. From this information calculate the following. [Note: enter numerical values only. No words or symbols] The simple deposit multiplier (to one decimal place) The money multiplier (to one decimal place) The monetary base ($m to one decimal place) $ m

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter25: Money, Banking, And The Federal Reserve System

Section: Chapter Questions

Problem 13P

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Suppose that banks are required to hold reserves equal to at least 4 per cent of their deposits and hold no excess reserves. Also suppose that desired holdings of currency by the non-bank public are 3 per cent of deposits. The total money supply is $450m. From this information calculate the following. (Note: enter numerical values only. No words or symbols) The simple deposit multiplier (to one decimal place) The money multiplier (to one decimal place) The monetary base ($m to one decimal place) $
n the table below, the money supply, defined by M3, is equal to ........ Currency held by the non-bank public ($ billion) Current deposits at banks ($, billion) Other deposits at banks and other deposits held by other deposit -taking institutions ($, billion) 60 240 1500 Select one: a. 1200 billion b. 1800 billion c. 1500 billion d. 1740 billion
You take $300 you had kept under your mattress and deposit it in your bank account. Suppose this $300stays in the banking system as reserves and banks hold reserves equal to 15 percent of deposits.The total amount of deposits in the banking system increases by $_________, and the money supplyincreases by $________.
5) Suppose, in Bangladesh, commercial banks have current account deposits of 4600 crore taka. Their reserves are 1100 crore taka, 25% of which are in deposits with the Bangladesh Bank (BB). Households and firms hold 800 crore taka as cash and coins. a) Calculate the monetary base (MB) b) Calculate the narrow money (M1) c) Calculate the cash reserve ratio (CRR).
3. Suppose that at present total currency in the Philippine economy is presently PHP5.5 trillion, total reserves are PHP3.5 trillion. a) How large is the monetary base? b) If the reserve-deposit ratio is 40%, then how large are total demand and checkable deposits? c) How large is the money multiplier? d) How large is the money supply? (Derive using the monetary base and money multiplier.) e) A year from now, the monetary base increases by 10%. Assuming a constant money multiplier, what is the additional money supply a year from now (in PHP)? f) The BSP suddenly raises the reserve ratio by 10% (while the currency- deposit ratio stays the same). What is the new money multiplier?
1. Describe in detail the differences between the three hypothetical countries money supplies, money multipliers, and likely impacts on each economy. 2. Explain how each of the following situations changes the quantity of money (money supply) in the economy, based on its computed change in money supply. The Federal Reserve System buys bonds. The Federal Reserve System auctions credit. The Federal Reserve System raises the discount rate. The Federal Reserve System raises the reserve requirement.
Suppose that the following information describes the banking system in Belarus. Currency = $940 billion Checking Deposits = $1,475 billion Total Reserves = S198 billion Required Reserves = $177 billion (a) Calculate the level of the monetary base (MB) in the banking system of Belarus. (b) Given the above data calculate the money multiplier (m). Round vour answer to 2 decimal places.
7. The government of Eastlandia uses measures of mon- etary aggregates similar to those used by the United States, and the central bank of Eastlandia imposes a required reserve ratio of 10%. Given the following infor- mation, answer the questions below. Bank deposits at the central bank = $200 million Currency held by public = $150 million Currency in bank vaults = $100 million %3D
3. Table below shows the money supply of a country in the year 2019; Items RM(Million) 10 890 Treasury bills 7/7 PRINCIPLES OF ECONOMICS CONFIDENTIAL Current deposits in commercial banks Saving and fixed deposits at commercial banks 36 790 24 650 Negotiable certificates Saving and fixed deposits at merchant banks 12 460 22 920 Coins and notes 14 660 Calculate total money supply in the country, (а) M1, M2 and M3. (b) Quasi money. Assume in 2018, the M1 is RM 73,800 million and the M2 is RM 88,400 million, calculate the percentage change in M1 and M2. (c) (a) Define monetary policy. Should the Bank Negara implement expansionary or contractionary monetary policy to control recession?
Consider the following monetary data: 2000 2008 Monetary base ($bn) 8.5 8.7 Reserve deposit ratio (%) 20 15 Currency deposit ratio (%) 13. 23 a. Calculate the change in the money supply between 2000-2008 if the currency deposit ratio changes as shown, but the reserve deposit ratio stays constant. b. Calculate the change in the money supply between 2000-2008 if the reserve deposit ratio changes as shown, but the currency deposit ratio stays constant. c. Which of the two changes is more responsible for the overall change in the money supply from 2000-2008? Why?
What are the official measures of money? What are the official measures of money? Item $billions Item $billions Are all the measures really money? Are all the measures really money? Non-chequable, non-personal deposits Chequable deposits Non-chequable, personal deposits Fixed term deposits 375 Non-chequable, non-personal deposits Chequable deposits Non-chequable, personal deposits Fixed term deposits Currency outside banks 325 The two main official measures of money in Canada today are 100 The two main official measures of money in Canada today are 100 250 230 The two main official measures of money in Canada really money. 140 320 The two main official measures of money in Canada really O A. M1 and currency; are not Currency outside banks 100 90 money. YB. M1 and M2; are YA. M1 and M2; are O C. currency and M2; are O B. M2 and M3; are not O D. M2 and M3; are not O C. currency and M2; are The table shows the amounts held as the various components of M1 and M2. O D. M1 and currency; are…
1. Let's pretend that our current system of money was strictly Base Ten, so that the only currency that we used were pennies, dimes, one dollar bills, ten dollar bills, hundred dollar bills, thousand dollar bills and so on. Instead of drawing pictures of the money, these abbreviations for each kind of coin or bill will be used: penny (A), dime (B), one dollar bill (C), ten dollar bill (D), hundred dollar bill (E), thousand dollar bill (F), and so on. Since you are entering the teaching profession, you probably won't need to handle anything higher than a thousand dollar bill, but who knows what the future holds? Write down the exchange that could be made for each of the following:a. AAAAAAAAAA = b. CCCCCCCCCC = c. EEEEEEEEEE = d. AAAAAAAAAA = e. CCCCCCCCCC = f. DDDDDDDDDD = a. AAABBCDD + AABBBBBBBBCC = b. ACCCCCCCEE + AAAABBCCCCCCCC = c. AAAAAAAAAEEE + AAAAAAAAEEEEEEE = 2. Let's pretend that our current system of money was strictly Base Ten, so that the only currency that we…