What is the maximum amount of money the banks

Assignment Help Econometrics

Reference no: EM13243610

Assume that there are no excess reserves inthe banking system and the reserve ratio is 40 percent. John Smith finds $10,000 incash under his mattress, stashed there by his great aunt who didn't believein banks. Since he is her legal heir, he takes the cash and deposits it in histransactions account.

a. What has happened to the moneysupply?

b. How many excess reserves will John'sbank have as a result of the transaction?

c. How much can John's bank loanout?

d. What is the maximum amount of money the banks can create through deposit creation?

Reference no: EM13243610

Questions Cloud

Calculate the expected return on the security : Suppose that a security costs $1,500 today. A. Calculate the percentage return on the Security if the payoff to the security in one Year is $1,000, $1,500, $2,000, or $2,500

What mass of barium is produced when molten barium chloride : What mass of barium is produced when molten barium chloride is electrolyzed by a current of 2.50 x 10^5 A for 6.00 hours

Calculate the standard deviation of the return : Suppose that a security costs $3,000 today and Pays off some amount b in one year. Suppose that B. is uncertain according to the following table of Probabilities:

Describe radioactive isotope with a half-life : A patient is given 5.5 x10^-2 mg of technetium-99 m, a radioactive isotope with a half-life of about 6.0 hours.How long untilth radioactive isotope decays to 6.0 x10-3 mg? (assume no excretin of the nucelotibe from the body.) Answer is in T =hours.

What is the maximum amount of money the banks : Assume that there are no excess reserves inthe banking system and the reserve ratio is 40 percent. John Smith finds $10,000 incash under his mattress, stashed there by his great aunt who didn't believein banks.

Justify the purchase of the new machines : Your company is considering the purchase of new earth movingequipment. The total purchase is $240,000 and we pay with $100,000 cash and borrow therest. (12% per year nominal, compounded monthly for 5 years).

Shows the combinations of model alpha : Find the combination of Model Alpha and Model Beta that maximizes the firm profit. What is firm's profit at this profit mix and shows the combinations of Model Alpha

Which explains the source of consumer surplus forgood : a. Good Ais an inferior good and Goods A and B are substitutes. b. Good Ais an inferior good and Goods A and B are complements. c. Good Ais a normal good and Goods A and B are substitutes. d. Good Ais a normal good and Goods A and B are complements. ..

Find the frequency of the oscillations : a 1.5-kg object is attached to an ideal massless spring with a spring constant of 20 nN/M OSCILLATES on horizontal, Find the frequency of the oscillations

User Account

All Pages