Exam 2 - SAMPLE QUESTIONS

Raisethediscountrateraisethereserverequirement d

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Unformatted text preview: . b. have $55,000 in excess reserves. c. need to raise an additional $5,000 of reserves to meet the reserve requirement d. None of the above is correct. 9 Name: ________________________ ID: A Table 29‐6. Bank of Springfield Assets Reserves Loans $19,200 228,000 Liabilities Deposits $240,000 ____ 36. Refer to Table 29‐6. Assume the Fed’s reserve requirement is 6 percent and that the Bank of Springfield makes new loans so as to make its new reserve ratio 6 percent. From then on, no bank holds any excess reserves. Assume also that people hold only deposits and no currency. Then by what amount does the economy’s money supply increase? a. $50,200 b. $72,000 c. $80,000 d. $106,000 ____ 37. If the reserve ratio for all banks is 8 percent, then $4,500 of additional reserves can create up to a. $4,500 of new money. b. $48, 913 of new money. c. $56,250 of new money. d. $75,000 of new money. Scenario 29‐1. The monetary policy of Salidiva is determined by the Salidivian Central Bank. The local currency is the salido. Salidivian banks collectively hold 100 million salidos of required reserves, 25 million salidos of excess reserves, 250 million salidos of Salidivian Treasury Bonds, and their customers hold 1,000 million salidos of deposits. Salidivians prefer to use only demand deposits and so the money supply consists of demand deposits. ____ 38. Refer to Scenario 29‐1. Assume that banks desire to continue holding the same ratio of excess reserves to deposits. What is the reserve requirement and what is the reserve ratio? a. 2 percen...
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