1. The First Bank of Fairfield Assets Liabilities Reserves $2,000 Deposits $10,0
ID: 1099843 • Letter: 1
Question
1.
The First Bank of Fairfield
Assets
Liabilities
Reserves $2,000
Deposits $10,000
Loans 8,000
Refer to Table 16-3. The reserve ratio for this bank is
A. 0 percent.
B. 20 percent.
C. 80 percent.
D. 100 percent.
2.
Bank of Pleasantville
Assets
Liabilities
Reserves
$2,000
Deposits
$20,000
Loans
18,000
Refer to Table 16-5. Assume the Federal reserve requirement is 9 percent and all banks besides the Bank of Pleasantville are exactly in compliance with the 9 percent requirement. Further assume that people hold only deposits and no currency. Starting from the situation as depicted by the T-account, if the Bank of Pleasantville decides to make new loans so as to end up with no excess reserves, then by how much does the money supply eventually increase?
A. $555.00.
B. $1,200.00.
C. $1,777.78.
D. $2,222.22.
3.
Over one time horizon or another, Fed policy decisions influence
A. Inflation and employment
B. Inflation but not employment
C. Employment but not inflation
D. Neither inflation nor employment
1.
The First Bank of Fairfield
Assets
Liabilities
Reserves $2,000
Deposits $10,000
Loans 8,000
Refer to Table 16-3. The reserve ratio for this bank is
Explanation / Answer
1. B) 20% =2,000/10,000
2. D) 20,000 *.09=1800 so 2,00 of excess reserves 200/.09= 2222.22
3.). A) Inflation and employment-----------correct answer------100% sure
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