Transaction deposits and existing non transaction deposits

Assignment Help Business Economics

Reference no: EM131076687

According to statistics provided by the Federal Reserve, total reserves of commercial banks currently equal $1.63 trillion. Required reserves are $130 billion, so excess reserves total approximately $1.50 trillion. The reserve requirement is 10 percent on transaction deposits, which include accounts that offer unlimited checking privileges, and there is no reserve requirement on time deposits. Non-transaction deposits currently amount to $2 trillion. Assume that changes in reserves held by banks affect transaction deposits only. a. According to the information given in the problem, determine the total amount of transaction deposits held in commercial banks. b. What are total deposits transaction and nontransaction at commercial banks? c. What would happen to deposits if the Fed mandated that commercial banks eliminate their excess reserves? d. How much would total required reserves be if total deposits remained at the level computed in part b, but the Fed imposed a 2 percent reserve requirement on nontransaction deposits and maintained the same 10 percent requirement on transaction deposits? e. Would the existing reserves be sufficient to meet reserve requirements if the Fed imposed a 10 percent requirement for both transaction deposits and existing non transaction deposits?

Reference no: EM131076687

Questions Cloud

How do scholars use the term myth : List the names of the five countries with the largest populations (in population order). What are the primary differences between the statistics of religious believers worldwide and the statistics of religious believers in the United States?

What are the factors that cause shifts in supply : The factors that cause shifts in supply and the importance of demand are examined. What is the law of supply, and what are the factors that cause shifts in supply? What is the law of demand and why is it important? Why does an increase in the price o..

Binding minimum wages cause frictional unemployment : Complete the following table with the quantity of labor supplied and demanded if the wage is set at $9.00. Then indicate whether this wage will results in a shortage or a surplus. Hint: Be sure to pay attention to the units used on the graph and in t..

Determine the data types and additional column properties : For each entity in the E-R model, specify a table structure, determine the data types and additional column properties, identify primary keys and foreign keys, and verify normalization on the resulting tables.

Transaction deposits and existing non transaction deposits : According to statistics provided by the Federal Reserve, total reserves of commercial banks currently equal $1.63 trillion. Required reserves are $130 billion, so excess reserves total approximately $1.50 trillion. Would the existing reserves be suff..

Reserve requirements associated with existing deposits : It has been determined that, in aggregate, financial institutions with depository accounts currently hold excess reserves equal to $3 billion—that is, they hold $3 billion more than is necessary to meet the reserve requirements associated with existi..

Would you advocate restricting the freedom of the press : Under what circumstances, if any, would you advocate restricting the freedom of the press, and to what degree would you restrict it? Substantiate your answer with logical arguments and/or evidence.

Calculate the accounting profit for pottery firm : Gomez runs a small pottery firm. He hires one helper at $14,500 per year, pays annual rent of $7,500 for his shop, and spends $18,000 per year on materials. Calculate the accounting profit for Gomez’s pottery firm?

Correlation between GDP growth and health outcomes : Discuss the correlation between GDP growth and health outcomes. Compare short-term trends vs. long-term trends. Why would this be an example of the fallacy of composition in health economics?

User Account

All Pages