s. Which of the following is nor inclušed inM1? a. A SS billion your wallet b. $
ID: 1116529 • Letter: S
Question
s. Which of the following is nor inclušed inM1? a. A SS billion your wallet b. $100 in your checking account c. $500 in your savings acoount d. All of the above are incladed inM 6. In a system of 100-percent-reserve banking a. Banks do not make loers e. Deposits are banks' only assets. b. Currency is the cely form of money d. All of the above aæe correct 7. Suppose the banking syslem currently has $400 tilion in reserves, the reserve requairement is S percent and excess reserves amount to $5 billion Whar is the level of deposits? a $5,000 bilion h$4,937,5 bilion $5,062 Sbilion d $4995hillion An economy starts with $50,000 in currency, All of this currency is deposited into a single bonk, and the bank then makes loans totaling $45,750. The T-account of the hank is shown below 45.750 a. 17.Spercent. b. 8.Spercem. d. 100 percent 9. Refer to the above Table. If all banks in the economy have the same reserve ratio as this hark, then the value of the oconomy's money muhiplier is 10. Refer to the above Table. If all banks in the economy have the same reserve ratio as this hank, then an increase in reserves of $150 for this bank has the potential to increase deposits for all banks by a $287.25. b $1,614.71. c.$1.764 7 $2,000 or moreExplanation / Answer
(5) (c)
Savings account is a part of M2 but not a part of M1.
(6) (a)
Since 100% of deposits are kept as reserves, there are no excess reserves available for lending. There are no loans made by banks.
(7) (b)
Required reserve ($ Billion) = Total reserves - excess reserves = 400 - 5 = 395
This is 8% of deposits (Required reserves Ratio = Reserves / Deposits).
Deposits ($ Billion) = 395 x (100% / 8%) = 4,937.5
(8) (b)
Required reserves Ratio = Reserves / Deposits = 4,250 / 50,000 = 0.085 = 8.5%
(9) (d)
Money multiplier = 1 / Required reserves ratio = 1 / 0.085 = 11.76
NOTE: As per Chegg answering guidelines, first 5 questions are answered.
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