Calculate the (target) reserve requirement

Assignment Help Microeconomics
Reference no: EM13223194

Assume that the banking system has no excess reserves. The combined balance sheet of all chartered banks is (in millions of dollars) 

Asset 
Reserves $15 000 
Loans $ 135000 

Liabilities 
$150 000 

Suppose the general public purchase $500 million in government bonds and pay for them by drawing cheques on their chartered bank deposits. 

1) Calculate the (target) reserve requirement 
2) What is the immediate effect of chartered bank reserve and deposits? Provide the balance sheet. 
3) What is the ultimate effect on chartered bank reserves, deposits, and loans? Provide the final balance sheet 

Reference no: EM13223194

Questions Cloud

Explain the level of earnings for the entire year : A security analyst specializing in the stocks of the motion picture industry wants to determine the relationship between the number of movie theater tickets sold in December and annual level of earnings in the motion picture industry.
Determine what is the nominal annual rate of return : A cannery is considering installing an automatic case-sealing machine to replace current hand methods. If they purchase the machine for 3800 in June, at the beginning of the canning season, they will save 400 per month for the 4 months each year.
Three general economic principles related to the article : Students will conduct an analysis of a recent article and provide their evaluation and outcome expectations in a written paper of 1500-2500 words that discusses:
Source of law may the u.s. government pass such a statute : What type or types of business entity(ies) do you recommend Able, Baker, Charlie and Delta create and from what source of law may the U.S. government pass such a statute?
Calculate the (target) reserve requirement : Suppose the general public purchase $500 million in government bonds and pay for them by drawing cheques on their chartered bank deposits. 1) Calculate the (target) reserve requirement
What is the proper current price of the investment : Suppose that a risk-free investment will make three future payments of $100 in one year, $100 in two years, and $100in three years. If the Federal Reserve has set the risk-freeinterest rate at 8 percent, what is the proper current price of this in..
The minimum cost of producing 800 units of output is what : a. If the price of capital is $7.50 per unit what is the per unit price of labor b. How many units of labor should the firm use in order to produce 400 units of output at the least cost c. The minimum cost of producing 800 units of output is what
How does one successfully select an expatriate : How does one successfully select an expatriate? In selecting a person for an expatriate assignment, what are the three major global mind-set attributes that successful expatriates possess?
Illustrate the impact of the change in the interest rate : a. use the theory of liquidity preference to illustrate in a graph, the impact of this policy on the interest rate. b. use the model of aggregate demand and aggregate supply to illustrate the impact of this change in the interest rate on output and..

Reviews

Write a Review

Microeconomics Questions & Answers

  What is millers wacc

Miller Manufacturing has a target debt ratio of 70% (that means weight of debt is 70%). Its cost of equity is 18%, and its cost of debt is 10%. If the tax rate is 35%, what is Miller's WACC?

  How global competition impacts ford

Determine how global competition impacts FORD. Should the organization/industry continue, expand, or reduce current operations in order to maximize profits? Explain your reasoning.

  How many pounds of potatoes will she purchase

Subsequent pounds are worth $0.30, how many pounds of potatoes will she purchase? What if she only had $3.00 to spend?

  What are the advantages and disadvantages of free trade

What are the advantages and disadvantages of free trade From an economic point of view, is free trade better than limited or no trade? Have you benefited from free trade How How is the economy impacted by trade

  Define observations on the market price and the quantity

Following are observations on the market price and the quantity of good X produced and consumed in three different years: $10 and 100 units, $4 and 57 units, and $8 and 88 units. Can we conclude that the market demand for X slopes upward

  Explain inefficiency of government operations

Find a newspaper or magazine article that highlights when the political process works poorly (not too hard). Write a 1-page paper on the economic reasons for this performance

  Why soft selling is a successful signal?

Instead of asking for a price, you offer to give them the product in exchange for 50% of their cost savings. Describe the information asymmetry, the adverse selection problem, and why soft selling is a successful signal.

  Effects of increase in interest rate on lonable funds

stuck on these an open economys GDP is always given by. 1.Y=C+I+G+T 2.Y=C+1+G+S 3.Y=C+I+G 4.Y=C+I+G+NX other things the same, an increase in the U.S interest rate causes the quanity of loanable funds supplied to 1. rise bc net ccapital outflow and do..

  Calculate the unemployment and labour force participation

Calculate the unemployment and labour force participation rates in 2014 and in 2015 and what challenges would face the Greek government if they wanted to undertake fiscal policy to address the problems described in b?

  What are the firms best response functions

What are the two firms' best response functions? Show you calculations and what will be the market price, the market output, the output of each firm and the firms' profits?

  Determine what additional steps apples competitors

Apple, determine how market commonality and resource similarity impact Apple's competitive standing in terms of its main rivals. Provide specific examples to support your response. Determine what additional steps Apple's competitors are likely to t..

  Explain the cost-based markup ratio

A firm is targeting 35,000 net monthly profit servicing 2000 cars. What price should the firm charge to realize the targeted profit.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd