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

Economics

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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.

Economics

M2 is about four times larger than M1

Indicate whether the statement is true or false

Economics

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.

Economics

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.

Economics