How much deposit the bank keep in reserves

Reference no: EM13738551

1. Remembering that currency in a bank's vault is not considered part of the money supply, describe why a consumer depositing $1000 in currency (part of M1) in a bank account and receiving a demand deposit (also part of M1) in the amount of $1000 in exchange does not change the money supply (M1).

2. Assuming the reserve ratio is 10%, how much of the $1000 deposit must the bank keep in reserves? How much can it loan out?

3.Suppose the Federal Reserve sells a bond for $1000. The money goes from ___________ (the Fed or the public's hands) to _____________ (the Fed or the public's hands) and the amount of currency in the public's hands __________ (decreases or increases)

Reference no: EM13738551

Questions Cloud

Discuss current and proposed real property tax reforms : Discuss current and proposed real property tax reforms. Do you think that the real property tax is regressive and a burden on lower-income people?

Training design worksheet : After you have completed the Training Design Worksheet, use that information as a guide to develop a 15-20 slide PowerPoint presentation to present your training ideas to the client company. Make sure to include detailed speaker's notes which prov..

Discuss how you would begin the job analysis of the position : Discuss how you would begin the job analysis of the position, Identify at least 2 areas where the employer would want to make sure that the person used to fill the position has the qualifications to provide the best services to the company's client..

Team in transition : Al-tech Manufacturing has seen a downturn in the market which resulted in a reduction of sales and net income. In a move to improve profitability and reduce overall administrative expenses, senior management has decided to merge with a former riv..

How much deposit the bank keep in reserves : How much of the $1000 deposit must the bank keep in reserves? How much can it loan out

Demonstrates the significance of the work undertaken : Post an executive summary of your Comprehensive Project in the body of a post in this discussion (please do not use attachments). An Executive Summary is a one-page document that outlines the purpose, process, findings, discussion, and findings of..

What do they do that encourages your loyalty : Think of your favorite stores. What do they do that encourages your loyalty? What do you like about the in-store experience? What further improvements would you suggest

Ethical norms and conventions of the organization : Power can also be abused and utilized to achieve personal agendas apart from ethical norms and conventions of the organization.

How did women help create their own identities : Women in the 17th and 18th centuries were in difficult position but they were far from powerless. How did women help create their own identities and what obstacles did they have to overcome?

User Account

All Pages