HW_chap_11_additional[1]

HW_chap_11_additional[1] - Assume that the required reserve...

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Econ 100 San Francisco State HW Chapter 11 You do not need to turn this problem in to me, but you can assume that there will be problems very similar to it in either a quiz or an exam. It would greatly benefit your to do it. 1) Lets say that in an economy there was: $10 million in currency outside of banks $1 million in currency in bank vaults and ATMs $15 million in checking accounts $30 million in savings accounts $3 million in outstanding checks $12 million in time deposits $16 million in money market funds $20 million in unused credit on credit cards $2 million in traveler’s checks What are the size of M1 and M2? 2) Lets say I take $2000 from under my bed and deposit it into a bank. Fill out this table to show how banks make money.
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Unformatted text preview: Assume that the required reserve ratio is 10% and there is no currency drain. Table 1: How banks make money Deposit Amount Excess Reserves Resulting Loan Money Supply First Deposit Second Deposit Third Deposit And so on 3) Lets say that: currency in circulation = $3 million reserves held by banks = $1 million bank deposits = $10 million What is the money supply? What is the monetary base? 4) Assume that the money multiplier is 1.9. Now lets say that that the Fed buys $200 million in Treasury Bills from a commercial bank. What is the change in the money supply? Now lets assume that the Fed sells $150 million in Treasury Bills to a commercial bank. What is the change in the money supply?...
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This note was uploaded on 09/08/2011 for the course ECON 100 taught by Professor Pgking during the Spring '08 term at S.F. State.

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HW_chap_11_additional[1] - Assume that the required reserve...

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