In: Economics
Question 14 (1 point)
Consider the following simplified balance sheet for a bank. If the required reserve ratio is 10 percent, and the bank loans out its excess reserves, 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 |
$2.2 thousand |
Deposits |
$11.0 thousand |
Your Answer:Question 14 options:
Answer |
Question 15 (1 point)
Consider the following simplified balance sheet for a bank. If the required reserve ratio is 10 percent, what is the money multiplier? Provide your answer rounded to two decimal places. Do not include any symbols, such as "$," "=," "%," or "," in your answer.
Assets |
Liabilities |
||
Reserves |
$2.3 thousand |
Deposits |
$8.7 thousand |
Your Answer:Question 15 options:
Answer |
Question 16 (1 point)
Consider the following simplified balance sheet for a bank. Suppose the required reserve ratio decreases from 10 percent to 9 percent. What is the new money multiplier? Provide your answer rounded to two decimal places. Do not include any symbols, such as "$," "=," "%," or "," in your answer.
Assets |
Liabilities |
||
Reserves |
$10 thousand |
Deposits |
$100 thousand |
Your Answer:Question 16 options:
Answer |
Question 17 (1 point)
Consider the following simplified balance sheet for a bank. If the required reserve ratio is 10 percent, how much in excess reserves does the bank hold? Provide your answer in dollars measured in thousands rounded to two decimal places. Do not include any symbols, such as "$," "=," "%," or "," in your answer.
Assets |
Liabilities |
||
Reserves |
$2.1 thousand |
Deposits |
$8.6 thousand |
Your Answer:Question 17 options:
Answer |
Question 14
Deposit = $11 thousand
Required reserve ratio = 10% or 0.10
Required reserves = Deposit * rr = $11 thousand * 0.10 = $1.1 thousand
Total reserves = $2.2 thousand
Excess reserves = Total reserves - Required reserves = $2.2 thousand - $1.1 thousand = $1.1 thousand
Now, if bank loans out its excess reserves then it will make loan of $1.1 thousand.
This will lead to increase in deposit by $1.1 thousand
So,
The answer is $1.1 thousand.
Question 15
Required reserve ratio (rr) = 10% or 0.10
Calculate the money multiplier -
Money multiplier = 1/rr = 1/0.10 = 10
Thus,
The money multiplier is 10.
Question 16
Required reserve ratio decreases from 10% to 9%.
Calculate the money multiplier -
Money multiplier = 1/rr = 1/0.09 = 11.11
Thus,
The new money multiplier is 11.11.
Question 17
Deposit = $8.6 thousand
Required reserve ratio (rr) = 10% or 0.10
Required reserves = Deposit * rr = $8.6 thousand * 0.10 = $0.86 thousand
Total reserves = $2.1 thousand
Calculate the excess reserves -
Excess reserves = Total reserves - Required reserves = $2.1 thousand - $0.86 thousand = $1.24 thousand
The excess reserves that bank hold is $1.24 thousand.