The commercial banks on Sunny Island have checking deposits of $4 million, reserves of $600,000, and loans of $2.4 million. The required reserve ratio is 10 percent. The banks have ________ of required reserves and ________ of excess reserves
What will be an ideal response?
400,000 / 200,000
You might also like to view...
If MPC = 0.75, a $40 billion decrease in government purchases would have what size effect on the "first round" of induced added consumption? a. It would increase first round consumption by $30 billion
b. It would increase first round consumption by $40 billion. c. It would increase first round consumption by $120 billion. d. None of the above; the first round effect would be a decrease in consumption.
M2 is about four times larger than M1
Indicate whether the statement is true or false
If a bank does not have enough reserves, it can:
A. Buy bonds on the open market. B. Raise the interest rate it charges borrowers. C. Borrow reserves from the discount window. D. Make more loans.
Which of the following describes a surplus-enhancing transaction?
A. Your state government imposes a higher minimum wage than the one set by federal law. B. A person pays $10.00 to buy a scoop of ice cream at a baseball game. C. The Federal government taxes the wealthy to pay for programs to help the poor. D. A firm lays off 25 workers in order to cut costs.