Question

Assume that currently banks pay 2% interest on money that customers deposit in savings accounts. As...

Assume that currently banks pay 2% interest on money that customers deposit in savings accounts. As the overall amount of money held in savings accounts increases, in financial markets

the demand for savings increases.

both supply and demand are increasing.

the supply of savings increases.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume that currently banks pay 2% interest on money that customers deposit in savings accounts. As...
Assume that currently banks pay 2% interest on money that customers deposit in savings accounts. As the overall amount of money held in savings accounts increases, in financial markets Group of answer choices the supply of savings increases. the supply of savings decreases. the demand for savings increases. both supply and demand are increasing.
1-Currently banks are holding a massive amountof excess reserves.   If banks decided that now was the...
1-Currently banks are holding a massive amountof excess reserves.   If banks decided that now was the time to start making loans, which of the following are realistic ways the Federal Reserve could keep the money supply from expanding? CHECK ALL THAT APPLY increase the interest rate paid on bank reserves make discount loans increase the reserve requirement purchase securities from banks sell securities to banks decrease the reserve requirement decrease the interest rate paid on bank reserves 2-If banks choose...
Which of the following chains of logic explain the functions of banks in the process of...
Which of the following chains of logic explain the functions of banks in the process of economic growth? Savers deposit their savings in banks. Banks direct these funds to firms that invest and engage in capital accumulation that furthers economic growth. Savers deposit their savings in banks. Banks engage in capital accumulation, which plays an important role in economic growth. Firms borrow from stock and bond markets. These funds are used for investment, which leads to the capital accumulation that...
Item Value ​($ billions) Currency 555 Savings and money market deposit accounts 2,929 ​Small-denomination time deposits...
Item Value ​($ billions) Currency 555 Savings and money market deposit accounts 2,929 ​Small-denomination time deposits 1,532 ​Traveler's checks outside banks and thrifts 8 Noninstitution money market mutual funds 774 ​Institution-only money market mutual funds 209 Transaction deposits 986 Calculate M2.$_______ billion.
PROMPT: For all questions assume the following starting point: The money supply (M) is composed of...
PROMPT: For all questions assume the following starting point: The money supply (M) is composed of currency (C) held by the non-bank private sector (NBPS) and demand deposits (DD) held at banks. Banks are required to hold cash reserves (CR) equal to 10% of their demand deposit liabilities. The remainder of the banks DD liabilities are backed by loans (L). Initially banks have 2000 in cash reserves and the NBPS holds 500 in currency. Currently, banks no not hold excess...
Assume 20% of the money is held as currency and the remainder as demand deposits. The...
Assume 20% of the money is held as currency and the remainder as demand deposits. The banks keep the excess reserves at zero. The required reserves are 15% of the demand deposits. If the Fed increases the reserves by $10 million what will be the increase in the money supply? 31.25 million 33.45 million 35.23 million 36.53 million
In the money market, if the interest rate exceeds the equilibrium interest rate, there is a...
In the money market, if the interest rate exceeds the equilibrium interest rate, there is a surplus of money. How is the surplus eliminated? A. The high interest rate increases the demand for money, eliminating the surplus. B. People buy bonds to rid themselves of the surplus money, bidding up their price and pushing interest rates down. C. Banks will lend out the surplus, lowering interest rates. D. The Federal Reserve will destroy currency, reducing the quantity of money. ------------------------...
1. John wishes to make a quarterly deposit into his savings account so that at the...
1. John wishes to make a quarterly deposit into his savings account so that at the end of 10 years the account balance will be $10,000. If the account earns 6% annual interest, compounded quarterly, how much should he deposit each quarter? 2. The maintenance on a machine is expected to be $155 at the end of the first year, then increasing by $35 each year for the next 7 years. What sum of money would need to be set...
Banks pay a slightly higher interest rate on savings if the account holder used their ATM...
Banks pay a slightly higher interest rate on savings if the account holder used their ATM card more often per month and reduced amount of cash carried in their wallet. How will this policy affect the ability of the bank to create loans?
Provide a brief explanation or show work 1. In the United States, the money supply is...
Provide a brief explanation or show work 1. In the United States, the money supply is determined: a. only by the Fed. b. only by the behavior of individuals who hold money and of banks in which money is held. c. jointly by the Fed and by the behavior of individuals who hold money and of banks in which money is held. d. according to a constant-growth-rate rule 2. In a 100-percent-reserve banking system, if a customer deposits $100 of...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT