Question

Suppose the banking system in Canada desired reserve ratio of 0.1 while the banking system in...

Suppose the banking system in Canada desired reserve ratio of 0.1 while the banking system in the United States has a desired reserve ratio of 0.2. In which country would an initial excess reserve of $100 be able to create a larger total amount of money creation?

a) United States

b) Canada

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
Suppose that the banking system has excess reserves of $10 million, the desired reserve ratio is...
Suppose that the banking system has excess reserves of $10 million, the desired reserve ratio is 10 percent and the currency drain ratio is 40 percent. By how much will the quantity of money increase? A) $28 million. B) $50 million. C) $22 million. D) $40 million. E) $12.5 million.
3. If the desired reserve ratio in the Canadian banking system is 20% and if a...
3. If the desired reserve ratio in the Canadian banking system is 20% and if a foreign company deposited 1 billion dollars to a Canadian bank, how much the total money supply would be increased? (5 points)
We know that the required reserve ratio (rrd) is 10%. Assume that the banking system has...
We know that the required reserve ratio (rrd) is 10%. Assume that the banking system has an excess reserves equal to $ 4 billion. Further, the currency in circulation equals $ 450 billion, and the total amount of checkable deposits equals $900 billion. Based on these numbers, calculate followings, (a) required reserves held by the banking system           (b) total reserves held by the banking system,           (c) monetary base          (d) total money supply (M1) (e) the money multiplier
If the banking system has $5 million in excess reserves, and the required reserve ratio is...
If the banking system has $5 million in excess reserves, and the required reserve ratio is 25 percent, what is the maximum amount by which the money supply can be increased? a. $5 million b. $2.5 million c. $20 million d. $25 million
Suppose the required reserve ratio is 6.5%, the banking system has $1,950 in total reserves, and...
Suppose the required reserve ratio is 6.5%, the banking system has $1,950 in total reserves, and is loaned-up. The deposits in the banking system must be $30,000 $63 $22,500 $127 part2: Which of the following is consistent with expansionary monetary policy? an open market sale of government bonds increasing the discount rate increasing the reserve requirement an open market purchase of government bonds
Consider a new deposit to the US banking system of $1000. Suppose that all banks have...
Consider a new deposit to the US banking system of $1000. Suppose that all banks have a desired reserve ratio of 20%. The following table shows how deposits, reserves, and loans enable the creation of money. Assume there is no currency drain and that banks do not hold on to excess reserves. A. Complete the table below Round Change in Deposits Change in Reserves Change in Loans 1 $1000 $200 $800 2 3 4 5 B. After 5 rounds, what...
Central Banks System Suppose a banking system with the following balance sheet has no excess reserves....
Central Banks System Suppose a banking system with the following balance sheet has no excess reserves. Assume that banks will make loans in the full amount of any excess reserves that they acquire and will immediately be able to eliminate loans from their portfolio to cover inadequate reserves. Assets Liabilities (in Billions) (in Billions) Tota reserves $150 Transactions accounts $500 Securities $150 Loans $200 Total $500   Total $500 You are required to answer the following Questions: 1) What is the...
i)    Tilaknesia has a reserve ratio of 20% in its banking system. Calculate the simple money multiplier.                     &nbs
i)    Tilaknesia has a reserve ratio of 20% in its banking system. Calculate the simple money multiplier.                                                                               (0.5 marks) On a given day customers deposit $3,300 into their banks. Based on the simple money multiplier calculated in part i), calculate the total amount that the money supply in the banking system will eventually increase to.                       (0.5 marks) Calculate the total amount that the money supply in the banking system will eventually increase to if the reserve ratio decreases to 16%.  Assume the amount of...
How would a decrease in the reserve requirement affect the (a) size of the money multiplier,...
How would a decrease in the reserve requirement affect the (a) size of the money multiplier, (b) amount of excess reserves in the banking system, and (c) extent to which the system could expand the money supply through the creation of checkable deposits via loans?
1. How would a decrease in the reserve requirement affect the (a) size of the money...
1. How would a decrease in the reserve requirement affect the (a) size of the money multiplier, (b) amount of excess reserves in the banking system, and (c) extent to which the system could expand the money supply through the creation of checkable deposits via loans? 2. Suppose that Security Bank has excess reserves of $8,000 and checkable deposits of $150,000. If the reserve ratio is 20 percent, what is the size of the bank’s actual reserves? 3. The Third...