Table 29-2. An economy starts with $10,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $9,250. The T-account of the bank is shown below. 24. Reserves Loans Assets $750 9,250 Liabilities Deposits $10,000 Refer to Table 29-2. The bank's reserve ratio is a. 7.50 percent. b. 8.12 percent. C. 92.50 percent. d. 100 percent. 25. Refer to Table 29-2. If all banks in the economy have the same reserve ratio as this bank, then the value of the economy's money multiplier is a. 1.33. b. 10.00. C. 10.81. d. 13.33. 26. Refer to Table 29-2. If all banks in the economy have the same reserve ratio as this bank, then an increase in reserves of $150 for this bank has the potential to increase deposits for all banks by a. $866.67. b. $1,666.67. C. $2,000.00. d. an infinite amount.

Table 29-2. An economy starts with $10,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $9,250. The T-account of the bank is shown below. 24. Reserves Loans Assets $750 9,250 Liabilities Deposits $10,000 Refer to Table 29-2. The bank's reserve ratio is a. 7.50 percent. b. 8.12 percent. C. 92.50 percent. d. 100 percent. 25. Refer to Table 29-2. If all banks in the economy have the same reserve ratio as this bank, then the value of the economy's money multiplier is a. 1.33. b. 10.00. C. 10.81. d. 13.33. 26. Refer to Table 29-2. If all banks in the economy have the same reserve ratio as this bank, then an increase in reserves of $150 for this bank has the potential to increase deposits for all banks by a. $866.67. b. $1,666.67. C. $2,000.00. d. an infinite amount.

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter21: The Monetary System

Section: Chapter Questions

Problem 2CQQ

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