1. The Fods correatly uses as a target for its monetary policy lthe Federal Fund
ID: 1125130 • Letter: 1
Question
1. The Fods correatly uses as a target for its monetary policy lthe Federal Funds rate the Prime Interest rate c) MI d) Free Reserves Uise the fallowing balance shest of Fst Nations Bhank to answer quesatioles 52 and 53. The resquaired reserve rnatio is 101 Liabilities+Networth Reserves00000 Demand deposits 1,250,00 Loars Securities $75,000 Property$225,000 200,000Capital stock 350,000 52. Requirod reserves for this commercial bank are a) $12,500 b) $125,000 e S1t0,000 d) none of the above 53. The maximum amount of demand depsit money that could be created in the banking system as a result of Firs Nations Bank loaning all of its excess reserves is a) $12,500,000 b) $1,250,000 c) $125,000,000 d) none of the above 54. Credit cards sacisfy all the finctions of money except a) medium of exchange b) store of value(wealth) e) unit of account d) credit cands satisfy all the functions of money PageExplanation / Answer
51) The answer is A -) federal Funds rate.
52) The answer is B -) $125000.
because required reserves = demand deposit * RRR
required reserves = 1250000 * 10 /100 = 125000
53) The answer is A -) $12500000
because maximum money creater = demand deposit * multiplier
mamimum money = 1250000 *10 = 12500000
54) THe answer is B -) store of value ( wealth)
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