3rd 211 HW 200S09

# 3rd 211 HW 200S09 - HOMEWORK#3-MACROECONOMIC PRINCIPLES...

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HOMEWORK #3--MACROECONOMIC PRINCIPLES Spring Semester--2009 Dr. Filer MW 2:00 P.M. to 3:15 P.M. in BAC 216 Due: End of class, Monday, April 13, 2009. Multiple Choice: Answer each of these questions by darkening the bubble on your scantron sheet, as if you were taking an exam in class. Hand in only the scantron sheet. Make sure you have darkened in your name and 10-digit ASU Affiliate ID number on the scantron sheet. 1. Assume: The currency to demand deposit ratio, C/DD = c is .5 or 50%. The reserve to demand deposit ratio, R/DD = rr is .5 or 50%. How much is the M1 money multiplier? A) 2.5 B) 1.5 C) 3 D) 1 E) 2 2. The Federal Open Market Committee consists of A) the chairman of the Board of Governors and five district presidents. B) the 12-member Board of Governors. C) seven members of the Board of Governors and five district presidents. D) seven members of the Board of Governors and a nine-member board of directors of the district banks. E) the president of the New York district bank and the Council of Economic Advisers. 3. Assume a reserve requirement of 25%, or .25. If a bank has zero excess reserves and \$100,000 in legal reserves, then its demand deposit liabilities must equal A) \$100,000. B) \$25,000. C) \$400,000. D) \$750,000. E) \$250,000. Use the following to answer questions 4-9: Balance Sheet of Bank National Assets Liabilities Vault Cash \$1,725 Deposits \$5,450 Deposit in Fed \$ 425 Loans \$3,300 Total Assets \$5,450 Total Liabilities \$5,450 Page 1

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4. Refer to the balance sheet above. If the Fed increased the reserve requirement from 10 percent to 25 percent, the money supply in the whole banking system could now potentially A) increase by \$3,150.00. B) increase by \$7,875.00. C) decrease by \$3,150.00. D) decrease by \$272.50. E) decrease by \$7,875.00. 5. Refer to the balance sheet above. If the Fed changed the reserve requirement from 10 percent to 5 percent, the bank's excess reserves would A) increase by \$1877.50. B)
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3rd 211 HW 200S09 - HOMEWORK#3-MACROECONOMIC PRINCIPLES...

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