Need help with this assignment!

Price: $60 USD

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.)

    Answer:  .

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       

Tutor Answer

(Top Tutor) Daniel C.
School: UC Berkeley
Studypool has helped 1,244,100 students
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1830 tutors are online

Brown University

1271 Tutors

California Institute of Technology

2131 Tutors

Carnegie Mellon University

982 Tutors

Columbia University

1256 Tutors

Dartmouth University

2113 Tutors

Emory University

2279 Tutors

Harvard University

599 Tutors

Massachusetts Institute of Technology

2319 Tutors

New York University

1645 Tutors

Notre Dam University

1911 Tutors

Oklahoma University

2122 Tutors

Pennsylvania State University

932 Tutors

Princeton University

1211 Tutors

Stanford University

983 Tutors

University of California

1282 Tutors

Oxford University

123 Tutors

Yale University

2325 Tutors