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QUESTION 28 Suppose that Mellon bank gets a deposit of $5000 and their required reserve ratio...

QUESTION 28

  1. Suppose that Mellon bank gets a deposit of $5000 and their required reserve ratio is 15%. Fill out their T-Account below that results from this deposit.

    Assets Liabilities
    Reserves $ Deposits $
    Loans $

    What is the money multiplier when the required reserve ratio is 15%? (Round to two decimal places)

    Suppose their required reserve ration falls to 10%. Fill out their T-Account below that results from this change to the required reserve ratio.

    Assets Liabilities
    Reserves $ Deposits $
    Loans $

    What is the money multiplier when the required reserve ratio is 10%?

18 points   

QUESTION 29

  1. If the required reserve ratio ( RRR) is 20 percent, the money multiplier is

    2.

    5.

    10.

    20.

2 points   

QUESTION 30

  1. If the required reserve ratio is 10 percent, an increase in bank reserves of $1,000 can support an increase in checking account deposits (including the original deposit) in the banking system as a whole of up to

    $100.

    $1,000.

    $10,000.

    $100,000.

Homework Answers

Answer #1
1
Assets Amount Liabilities Amount
reserve 15% 750 Deposit 5000
loan 4250
5000 5000
money multiplier= 1/ Cash reserve ratio
6.666666667
2 if reserve ratio is 10%
Assets Amount Liabilities Amount
reserve 10% 500 Deposit 5000
loan 4500
5000 5000
money multiplier= 1/10%
10
3 if the Rris 20% multiplier will be
5
option B is correct
4 bank reserve * 1/ RR
10000
option C is correct
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