Economics 210 – Homework Chapter 13 – Money and Banks
(1) Suppose a bank has $1 million in deposits, a required reserve ratio of 10 percent, and reserves of $250,000. Then the bank has excess reserves of:
(a) $100,000
(b) $150,000
(c) $850,000
(d) $900,000
(2) Suppose a bank has $300,000 in deposits, a required reserve ratio of 5 percent, and bank reserves of $45,000. Then it can make new loans in the amount of:
(a) $2,250
(b) $15,000
(c) $30,000
(d) $45,000
(3) Suppose a bank has $300,000 in deposits, a required reserve ratio of 20 percent, and bank reserves of $45,000. Then the bank can make new loans in the amount of:
(a) -$3,000
(b) +$15,000
(c) -$75,000
(d) -$15,000
(4) Suppose the entire banking system has $200 million in deposits, a required reserve ratio of 10 percent, and total reserves for the whole system of $45 million. Then the whole system can make new loans in the amount of:
(a) $20 million
(b) $25 million
(c) $45 million
(d) $250 million
(5) If the minimum reserve ratio is 10 percent, the money multiplier is:
(a) 1
(b) 10
(c) 15
(d) 20
(6) Suppose a bank has $200,000 in deposits and a required reserve ratio of 15 percent. Then the required reserves are:
(a) -$3,000
(b) $30,000
(c) $13,333
(d) $1,333,333
(7) If excess reserves are $100,000, demand deposits are $1,000,000, and the required reserve ratio is 20 percent, then total reserves are:
(a) $50,000
(b) $150,000
(c) $250,000
(d) $300,000
(8) A reduction in the money supply should shift:
(a) the aggregate demand curve to the left.
(b) the aggregate demand curve to the right.
(c) the aggregate supply curve to the right.
(d) the aggregate supply curve to the left.
(9) In Figure 13.2 in your text, how large a loan can Bank# 4 make? ______________
(10) In Figure 13.2 in your text, what volume of loans can the entire banking system support?
______________