# Need help with this assignment!

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Question description

Help me understand this Economics question please, " If a single bank is holding \$1,000,000 in required reserves and the reserve requirement is reduced from 25% to 20%, the bank will be able to lend what additional amount?  (Reconstructing this bank's T-account will help you answer this question.)   a.  \$10,000.  f. \$500,000.   b.  \$50,000.  g.  \$1,000,000.   c.  \$100,000.  h.  \$\$4,000,000.   d.  \$200,000.  i. \$5,000,000.   e.  \$250,000.  j.  Who knows?

A bank has \$5000 in vault cash, \$15,000 in reserves on deposit with the Fed, \$3000 in gold, \$1000 in U.S. government securities, and \$1000 in other securities, and \$105,000 in demand deposit liabilities. The reserve requirement for this bank is 20%.  In this situation, what will tend to happen with this bank?

a.  a loan for \$15,000 will be made.

b.  a loan for \$5,000 can be made.

c.  \$1,000 in loans must be called in.

d.  \$5,000 in loans must be called in.

e.  the money supply will shrink by \$25,000.

f.  the money supply will increase by \$25,000.

g.  the money supply will increase by \$5,000.

h.  the money supply will decrease by \$5,000.    Answer:  .

Given the situation in the question above, what will happen to the money supply for the banking system as a whole?  (Use the same set of answers.)

3.  Assume that I move \$1000 from my credit union savings account to my checking account at the same credit union.  Indicate whether the following statements will be true or false:

a.  As a result of this, the amount of currency will decrease.  T  F  (Circle one)

b.  The level of M1 will rise.  T  F  (Circle one)

c.  The level of M2 will rise.  T  F
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