What is the effect on (1) demand deposits, (2) required reserves, and (3) excess

Question

What is the effect on (1) demand deposits, (2) required reserves, and (3) excess reserves of banks given the following transactions? ie Lower, Higher or No effect

a.

The general public builds up its holdings of cash by withdrawing funds in checking accounts.

b.

After Christmas the general public deposits cash in checking accounts in commercial banks. (How may seasonal changes in the public's need for cash alter banks' ability to lend?)

c.

Corporations borrow from commercial banks.

Note: Should be nine answers ie (a) 3     (b) 3     (c)   3 (they should be lower, higher or no effect) Please list each one that way

a.

The general public builds up its holdings of cash by withdrawing funds in checking accounts.

b.

After Christmas the general public deposits cash in checking accounts in commercial banks. (How may seasonal changes in the public's need for cash alter banks' ability to lend?)

c.

Corporations borrow from commercial banks.

Explanation / Answer

A. 1-Higher 2-Higher 3-Lower B. 1-Lower 2-No Effect 3-Higher C. 1-Higher 2-Higher 3-No Effect Seasonal changes in money use will change how much the bank has to lend (more or less) depending on if people are spending or saving.

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.