Module 25 WS

The reserve requirement is 20%, and Leroy deposits his $1,000 check received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. By how much did the monetary base change?

$0

Suppose a bank already has excess reserves of $800 and the reserve ratio is 20%. If Andy deposits $1,000 of cash into his checking account and the bank lends $600 to Melanie, that bank can lend an additional:

$1,000

Suppose a bank receives a $5,000 deposit, and the reserve ratio is 25%. The bank is required to keep in reserve an amount equal to:

$1,250

Suppose your grandma sends you $100 for your birthday and you deposit $100 into your checking account at the local bank. The reserve ratio is 10%. Based upon this deposit, the bank's reserves have increased by _____ and the bank's checkable deposits have increased by _____.

$100; $100

Suppose the banking system does NOT hold excess reserves and the reserve ratio is 20%. If Sam deposits $500 of cash into his checking account, the banking system can increase the money supply by:

$2,000

The reserve requirement is 20%, and Leroy deposits his $1,000 check received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. How much of the deposit is the bank required to keep in reserves?

$200

If a bank gets a new deposit of $100 cash and it has a 20% required reserve ratio, then the total amount by which deposits can increase is:

$500

The reserve requirement is 20%, and Leroy deposits his $1,000 check received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. What is the maximum expansion in the money supply possible?

$4,000

The reserve requirement is 20%, and Leroy deposits his $1,000 check received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. How much can the bank loan be based on the $1,000 deposit?

$800

Suppose the reserve ratio is 25%, then the money multiplier is

4

The reserve requirement is 20%, and Leroy deposits his $1,000 check received as a graduation gift in his checking account. The bank does NOT want to hold excess reserves. Which of the following is an accurate description of the bank's balance sheet immediately after the deposit?

Reserves increase by $1,000, and demand deposits increase by $1,000.

Suppose that there are no excess reserves in the banking system and the current amount of demand deposits are equal to $100,000. Now the monetary authorities lower the required reserve ratio from 10% to 5%. Which of the following will likely follow?

The money creating potential of the banking system will rise.

Which of the following would be the initial effect of an individual making a $10,000 cash deposit in a bank?

The money supply would not be affected by the deposit

The reserve ratio is defined as the ratio of:

bank reserves to customers' bank deposits

Which of the following is a component of BOTH the monetary base and the money supply?

currency in circulation

A bank's capital is the:

difference between its total assets and its total liabilities

The existence of banks:

results in the money supply being larger than the amount of currency in circulation

If banks were required to keep 100% of deposits in reserves, they could:

make no loans

The _______ multiplier is equal to _______ .

money; 1 divided by the required reserve ratio

Reserve requirements:

set the minimum amount of reserves a bank must hold