Find the bank required reserves and its excess reserves

Assignment Help Business Economics
Reference no: EM131966489

1. A bank has $100,000 in deposits. It currently holds $60,000 in reserves.

a. If the required reserve ratio is 0.15, find the bank's required reserves and its excess reserves.

b. Why might a bank choose to hold excess reserves, given that excess reserves will not earn profit? (In this example, we are assuming that the Fed is not paying interest on reserves.)

2. We calculate the money multiplier as 1/reserve requirement. This assumes that banks will not hold any excess reserves. Would you expect the multiplier to be larger or smaller if banks decide to hold excess reserves? Explain.

Reference no: EM131966489

Questions Cloud

Create realistic estimates of results based on the program : This week you will develop hypothetical results for your program evaluation. For each program criterion, create realistic estimates of results.
The sinking fund provision requires firm : The sinking fund provision requires a firm to:
A list and description of each associated models : Provide a list and description of each associated models. Create a separate section and write your own reflection of the solutions provided.
Why would you use this theory : Apply the rational choice model to arrive at your recommendation for Joe regarding his response to the invitation to spend the weekend on Bill's yacht.
Find the bank required reserves and its excess reserves : a. If the required reserve ratio is 0.15, find the bank's required reserves and its excess reserves.
Explain an analysis of the research methodology : Your 5 minute video presentation must include the following elements: An analysis of the research methodology used.
Write the null and alternative hypotheses symbolically : You are going to test the claim using a=0.05 and assume that your data is normally distributed and the population standard deviation is not known.
What percentage should be invested in the risk-free asset : what percentage of the client's investment budget should be invested in the market portfolio, and what percentage should be invested in the risk-free asset?
How the product cycle theory relates to the growth of an mnc : Explain how theory of comparative advantage relate to the need for international business. Explain how the product cycle theory relates to the growth of an MNC.

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

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