Reference no: EM131102904
Money and Banking
1. If the Fed raises the discount rate what effect will this have on the monetary base and on the money supply?
2. Suppose that a bank has assets: some required reserves, some excess reserves, some loans, and some securities. If they change their strategy, by how much can they increase their loans?
3. Suppose that the required reserve ratio is 12.5%. If reserves in the banking system increase by $3 billion as a result of discount loans of $3 billion, why isn't the banking system in equilibrium? What will continue to happen in the banking system until equilibrium is reached? Show changes to the banking system's balance sheet.
4. If the fed decides to use discount policy to increase the money supply what will it do? Be specific about who within the federal reserve system makes the decision, and who else is involved in the process.
5. If the fed decides to use open market operations to raise the interest rate what will it do? Be specific about who within the federal reserve system makes the decision, and who else is involved in the process.
6. During Christmastime, when the public's holding of currency increase, what defensive open market operations typically occur? Why?
7. If a bank buys $70 million of bonds from the Fed and also borrows $30 million from the discount window, what will be the effect on the level of checkable deposits?
8. In 2008 the Fed began paying interest on reserves. What do you think happened to the level of excess reserves after this change was made?
Excel Problem: For this problem, you must calculate your answer using excel. You must ALSO display the required balance sheets in excel and upload the spreadsheet.
9. Suppose that the required reserve ratio is 6.25%. If the Fed sells $350 million of bonds to the First National Bank. What happens to reserves and the monetary base? What will happen to the money supply? Show the changes in First National Bank's balance sheet, The Federal Reserve's balance sheet, and the collective banking system's balance sheet.
The Money Creation Game
There is a 10% reserve requirement. Suppose the fed prints $1,000,000 which gets deposited into Bank A. Bank A loans the money which gets deposited into bank B. Bank B loans the money, etc. Fill in the table below.
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Bank
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Deposits
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Required Reserves
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Loans
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A
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B
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C
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D
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E
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F
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G
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H
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I
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J
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K
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L
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M
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O
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Total
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Now Calculate the Deposits, Reserves, and Loans for the entire banking system (i.e., not just banks A through O, but also P through Z and beyond).
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Variance of a data set
: (a) If the variance of a data set is zero, then all the observations in this data set are zero.(b) If P(A) = 0.4 , P (B) = 0.5, and A and B are disjoint, then P(A AND B) = 0.9.
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Analyze the ways in which government and religion interact
: Discuss the significance of religion and government on other characteristics of the country's culture such as in literature, music, and art. Please provide two specific examples.
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Graph of the exponential function
: What is an exponential function? What is different about the graph of the exponential function versus the graph of a linear function?
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Find the pulse shape function corresponding to this spectrum
: Show by a suitable sketch that the triangular spectrum of Figure 4.8(a) satisfies Nyquist's pulse shaping criterion.
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What will continue to happen in the banking system
: If reserves in the banking system increase by $3 billion as a result of discount loans of $3 billion, why isn't the banking system in equilibrium? What will continue to happen in the banking system until equilibrium is reached?
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Difference between a stock dividend and a stock split
: What is the difference between a stock dividend and a stock split? As a stockholder, would you prefer to see your company declares a 100 percent stock dividend or a 2-for-1 split? Assume that either action is feasible.
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Rational numbers and irrational numbers
: What is the difference between Real numbers, Rational Numbers and Irrational Numbers?
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Percentage of passed in both subject
: In a examination 32% students are failed in maths, 40% students are failed in Science, 20% students are failed in both subject then what will be the percentage of passed in both subject?
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Accounting that provides economic information
: 1. (a) Managerial accounting is a field of accounting that provides economic information for all interested parties. Do you agree? Explain why
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