How much money will ultimately be created by this event

Assignment Help Business Economics
Reference no: EM13152283

Assume that the Bank of Ecoville has the following balance sheet and the Fed has a 10% reserve requirement in place:

Balance Sheet for Ecoville International Bank

ASSETS LIABILITIES

Cash $33,000 Demand Deposits$99,000

Loans 66,000

Required:

Now assume that the Fed lowers the reserve requirement to 8%.

1) What is the maximum amount of new loans that this bank can make?

2) Assume that the bank makes these loans. What will the new balance sheet look like?

3) By how much has the money supply increased or decreased?

4) If the money multiplier is 5, how much money will ultimately be created by this event?

5) If the Fed wanted to implement a contractionary monetary policy using reserve requirement, how would that work?

Reference no: EM13152283

Questions Cloud

What are some of the dietary factors with cancer : What is the benefit of good nutritional support with cancer patients?
Calculate the mass of sodium nitrate : calculate the mass of sodium nitrate, NaNO3, required to produce 7.00g of oxygen according to the following reaction:
Redeems in a qualifying stock redemption : Canary Corporation has 1,000 shares of stock outstanding. It redeems in a qualifying stock redemption 200 shares for $200,000 at a time when it has paid-in capital of $100,000 and E & P or $800,000. What would be the charge to Canary's E & P as a ..
What is the number of moles of air : At 0.0oC, if the volume of air is 3.4 mL and the pressure of the atmosphere that day is 695 mmHg, what is the number of moles of air?
How much money will ultimately be created by this event : By how much has the money supply increased or decreased? If the money multiplier is 5, how much money will ultimately be created by this event?
Determining ending retained earnings balance : Declared stock dividends of $40,000 Declared cash dividends of $30,000 A 2 for 1 stock split involving the issue of 200,000 shares of $5 par value common stock for 100,000 shares of $10 par value common stock Suffered a net loss of $60,000 What is..
What is the minimum concentration of ammonia : What is the minimum concentration of ammonia that should dissolve AgBr to produce a 0.01 M Ag(NH3)2+ solution
Problem regarding straight-line depreciation : Straight-line depreciation is used. Demers reported net income of $28,000 and $32,000 for 2006 and 2007, respectively. Compute the gain recognized by Demers Company relating to the equipment for 2006:
Which of the following is true of metabolism : Which of the following is true of metabolism in its entirety in all organisms?

Reviews

Write a Review

Business Economics Questions & Answers

  Utilizes the keynesian cross to predict the impact

utilizes the Keynesian cross to predict the impact on equilibrium GDP of equal-sized rise in both the government purchases also taxes

  Right-wrong direction among its present strategies.

By what reasons financial crisis as well as either United States is going in right-wrong direction among its present strategies.

  Which of the subsequent industries is most such asly

Which of the subsequent industries is most such asly to be monopolistically competitive. A normative economic statement such as "The minimum income should be abolished".

  Illustrate what effect did this decline

An average yearly rate of 10 to 11 percent in the late 1980s. Illustrate what effect did this decline have on.

  Conclude how fixed and variable costs should be adjusted

Conclude how fixed and variable costs should be adjusted to maximize profit and identify methods to reduce costs.

  Elucidate what evidence of excess supply or excess demand

Elucidate what evidence of excess supply or excess demand can you cite in these examples.

  Explain how much money will pat have available to spend

Explain how much money will Pat have available to spend on her new computer after 1 year.

  Illustrate what are the levels of income every worker

Illustrate what are the levels of income every worker and consumption per worker.

  Elucidate what happen in the short run to market supply

Elucidate what happen in the short run to market supply and demand curves, market price, the firm's output, the firm's profit.

  Why do five pillars of islam make it an ideal religion

Why do five pillars of Islam make it an ideal religion for a nomadic people. Why did African rivers turn out to be a disappointment to European colonial powers.

  Xplain how should manager of company acquire flour

To produce that many donuts weekly, company uses 1,000 pounds of flour, which must be delivered by 5:00 am every Friday morning. Explain how should manager of company acquire flour. Explain."

  Inflation adjusted data also identify the periods

Look at the inflation adjusted data also identify the periods of negative real economic growth. Illustrate what might have caused every of these periods of economic decline.

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