Answer the next question on the basis of the following consolidated balance sheet of the commercial banking system. Assume that the reserve requirement is 20%. All figures are in billions.Assets (billions of dollars)Liabilities & Net Worth (billions of dollars)Reserves$200Checkable deposits$1000Securities300Stock shares400Loans500 Property400 If the Fed reduced the reserve requirement from 20% to 16%, excess reserves in the commercial banking system would increase by ________ and the monetary multiplier would rise to ________.
A. $40 billion; 6.25
B. $10 billion; 5
C. $40 billion; 12.5
D. $10 billion; 10
Answer: A
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Which of the following is a reason why a firm would experience diseconomies of scale?
A) As the size of the firm increases, it must operate in other countries where differences in language, customs, and laws increase its average costs. B) To finance an increase in the size of its plant a firm must borrow more money or sell more shares of stock. C) As the size of the firm increases, it becomes more difficult to find markets where it doesn't already have operations. D) As the size of the firm increases it becomes more difficult to coordinate the operations of its manufacturing plants.
The average tariff rate dutiable imports in the United States is approximately
A) less than 10 % of the value of imports. B) 15% of the value of imports. C) 20 % of the value of imports. D) 25% of the value of imports. E) more than 30% of the value of imports.
The tying down of the price level to a nominal variable by the central bank is known as committing to ________
A) a nominal anchor B) rational expectations C) a customs union D) a positive aggregate demand shock
The Solow model is ________
A) the basic model of how technology changes over time B) the foundation for the classical economic thought of Adam Smith C) one of the dominant explanations of the business cycle D) based on the notion of diminishing marginal product of capital and labor