Suppose that a bank has $100 million in checkable deposits and the required rese
ID: 1187467 • Letter: S
Question
Suppose that a bank has $100 million in checkable deposits and the required reserve ratio is 0.1. If the bank has $5 million in excess reserves, then its actual reserves must be?
When the Fed buys U.S. government securities from a member bank, the immediate effect on that member bank's balance sheet is?
7. Suppose that partners Kemp and Sam open a goldsmith shop and general store in the Wild West. The more rapidly people "cash in" their bank notes,
a. the higher their profit from making loans will be
b. the lower their profit from the goods in the store
c. the fewer bank notes they will be able to issue
d. the larger the denominations in which they will have to issue bank notes
e. the smaller their reserve ratio
LEFTBANK Assets Liabilities and Net Worth Deposits with the Fed -$10,000 U.S. Government securities +$10,000
Refer to Exhibit 15-3. Leftbank's total reserves Answer Selected Answer:
7. Suppose that partners Kemp and Sam open a goldsmith shop and general store in the Wild West. The more rapidly people "cash in" their bank notes,
a. the higher their profit from making loans will be
b. the lower their profit from the goods in the store
c. the fewer bank notes they will be able to issue
d. the larger the denominations in which they will have to issue bank notes
e. the smaller their reserve ratio
Explanation / Answer
Federal Reserve System
n.
A U.S. banking system that consists of 12 federal reserve banks, with each one serving member banks in its own district. This system, supervised by the Federal Reserve Board, has broad regulatory powers over the money supply and the credit structure.
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