question archive 1) The Third National Bank of Billy Bob has $1,000,000 in customers' checking deposits
1) The Third National Bank of Billy Bob has $1,000,000 in customers' checking deposits
Subject:EconomicsPrice:2.86 Bought9
1) The Third National Bank of Billy Bob has $1,000,000 in customers' checking deposits. The current Required Reserve Ratio (RRR) is 15%. They counted all their cash in the bank (vault cash) and they have $2,000. How much is this bank required to have on reserve deposit at their Federal Reserve District Bank?
Group of answer choices
A) $148,000
B) $14,800
C) $152,000
D) $20,000
2. What institutions can actually create money?
Group of answer choices
A) The Federal Reserve.
B) The United States Treasury
C) Individual commercial banks and other thrift institutions, such as credit unions.
D) Both a and c.
3. The Federal Reserve sells securities on the open market. What does this do to the reserves of the commercial banks?
Group of answer choices
A) Nothing.
B) Decreases reserves.
C) Increases reserves.
D) We can't really say. Not enough information.
4. Consider multiple deposit expansion. If the RRR is 20%, how much is the monetary multiplier?
Group of answer choices
A) 4
B) 5
C) 20
D) 10
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
1. C.
2. C.
3. B.
4. B
Step-by-step explanation
Required Reserves = Required Reserve Ratio × Deposits
Required reserves = 15% * $1,000,000
= 150,000
Required reserves = 150,000 +2000
= $152,000
Money multiplier = 1 /RRR
= 1 / 0.2
= 5
