Question

In: Economics

11. If the Bank of Namibia increases the required reserve ratio from 5% to 10%, the...

11. If the Bank of Namibia increases the required reserve ratio from 5% to 10%, the value of the credit multiplier

(a) increases from 10 to 20

(b) decreases from 10 to 5

(c) decreases from 20 to 10

(d) increases from 5 to 10

12. Suppose Emerald deposits N$10 000 at Standard Bank. If the reserve requirement is 5%, maximum deposit expansion for the commercial banking system is:

(a) N$200 000

(b) N$205 000

(c) N$150 000

(d) N$100 000

13. The precautionary demand for money is

(a) An idle balance

(b) An active balance

(c) Directly related to interest rates

(d) Inversely related to income

14. To counteract a recession, the Bank of Namibia could

(a) increase the Repo rate, increase the required reserve ratio, and sell securities on the open market.

(b) increase the Repo rate, decrease the required reserve ratio, and sell securities on the open market.

(c) decrease the Repo rate, increase the required reserve ratio, and buy securities on the open market.

(d) decrease the Repo rate, decrease the required reserve ratio, and buy securities on the open market.

15. An expansionary fiscal policy could include:

(a) Lower interest rates

(b) increased lending by the commercial banks

(c) an increase in corporate taxes

(d) an increase in discretionary government spending.

Expert Solution

Rahul Sunny answered 2 years ago

Suppose that a bank has a required reserve ratio (target reserve ratio) of 10%, reserves of...

Suppose that a bank has a required reserve ratio (target reserve ratio) of 10%, reserves of $2.2 billion, loans of $17.8 billion, deposits of $20 billion, and no other liabilities or assets. a. (4 points) What is the amount of loans at equilibrium? b. (4 points) Suppose that the Bank of Canada’s currency issue (legal tender) is $52 billion, private bank deposits at the Bank of Canada are $2 billion, currency in circulation is $36 billion, and the target reserve...

500.00 has been deposited into Bank A. The required reserve ratio is 10%, but Bank A...

500.00 has been deposited into Bank A. The required reserve ratio is 10%, but Bank A also holds 30.00 in excess reserves. Bank A suffered Depreciation of the deposit is 50.00. (a). Indicate what will happen to Bank A's balance sheet as a result of the transaction (b). Indicate what will happen to Bank A's balance sheet as a result of the transaction if the bank does not hold any excess reserves. (c). Explain THREE ways in which banks can...

9. A bank is operating under a required reserve ratio of 10%. If this bank has...

9. A bank is operating under a required reserve ratio of 10%. If this bank has excess reserves of $1,000, it can loan out up to a maximum of: A. $0. B. $1,000. C. $1,100. D. $10,000. E. None of these 10. The money supply will grow faster through deposit creation when the legal reserve requirement is: A. high, and banks hold excess reserves. B. high, and banks cannot find good customers to lend to. C. low, and banks are...

1) Suppose a bank receives a $1000 deposit. The required reserve ratio is 10%. The bank...

1) Suppose a bank receives a $1000 deposit. The required reserve ratio is 10%. The bank makes an $850 loan and holds $150 in reserves. d. Demonstrate what happens in the market for Federal Funds graphically. Show how the federal funds rate and the quantity of federal funds changes. [10pts]

How does the reserve ratio change if the Fed increases the required reserve ratio? How does...

How does the reserve ratio change if the Fed increases the required reserve ratio? How does the currency-deposit ratio change if people decide to keep more of their money in cash rather than depositing it? If people decide to hold zero currency (cu→0, meaning the currency-deposit ratio goes to zero), what is the relationship between the money supply and the monetary base (what is the money multiplier)? If people decide to hold all of their money as currency and never...

Assume the required reserve ratio at The First Bank of Idaho is 10%. The First Idaho...

Assume the required reserve ratio at The First Bank of Idaho is 10%. The First Idaho Bank is a primary dealer, which means that it is a financial institution that is able to buy and sell securities directly to the U.S. Federal Reserve (Fed). Remember any bank in the U.S. can borrow from the Fed. Provided below is the balance sheet for The First Bank of Idaho: Type of Asset Asset Amount Type of Liability Bank Capital Reserves $50,000 Checkable...

Consider the following simplified balance sheet for a bank. Suppose the required reserve ratio decreases from 10...

Consider the following simplified balance sheet for a bank. Suppose the required reserve ratio decreases from 10 percent to 5 percent. By how much will bank deposits increase? Provide your answer in dollars measured in thousands rounded to two decimal places. Do not include any symbols, such as "$," "=," "%," or "," in your answer. Assets Liabilities Reserves $10 thousand Deposits $100 thousand Consider the following simplified balance sheet for a bank. Suppose the required reserve ratio decreases from 10 percent to...

A bank receives $1,000 in new checkable deposits. With a required reserve ratio of 10%, how...

A bank receives $1,000 in new checkable deposits. With a required reserve ratio of 10%, how much does this bank set aside as required reserves? How much can this bank at most lend?

Suppose the Federal Reserve System has a required reserve ratio of 10% and there are no...

Suppose the Federal Reserve System has a required reserve ratio of 10% and there are no excess reserves in the system. Explain the impact of the following action: The Federal Open Market Committee conducts an open market purchase of $25 million of U.S. securities from the commercial banking system. Identify the impact on both the Money Supply and on Aggregate Demand. Be specific.

1.When the Bank of Canada increases the overnight rate, it: a.increases the reserve to deposit ratio...

1.When the Bank of Canada increases the overnight rate, it: a.increases the reserve to deposit ratio (rr). b.is likely to decrease the monetary base (B). c.decreases the reserve to deposit ratio (rr). d.is likely to increase the monetary base (B). 2.The concept of monetary neutrality in the classical model means that an increase in the money supply growth rate will increase: a.real interest rates. b.real GDP. c.both saving and investment by the same amount. d.nominal interest rates.