Question

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.

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