FIN 100 Week 2 Homework
FIN 100 Week 2 Homework
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Question 1
As the executive of a bank or thrift institution you are faced with an intense seasonal demand for loans. Assuming that your loanable funds are inadequate to take care of the demand, how might your Reserve Bank help you with this problem?
Provide loans to depositories when additional funds are needed
Approve new loans
Provide oversight for the issuing of new loans arrangements
Monitor and manage new loan agreements
Question 2
Assume that Banc One receives a primary deposit of $1 million. The bank must keep reserves of 20 percent against its deposits. Prepare a simple balance sheet of assets and liabilities for Banc One immediately after the deposit is received.
ASSETS
LIABILITIES
Reserves
$1 Million
Deposits
$1 Million
ASSETS
LIABILITIES
Reserves
$800,000
$200,000
Deposits
$1 Million
ASSETS
LIABILITIES
Reserves
$1 Million
Deposits
$800,000
$200,000
Question 3
Assume a financial system has a monetary base of $25 million. The required reserves ratio is 10 percent, and there are no leakages in the system. What is the size of the money multiplier?
15.00
11.00
.999
10.00
Question 4
Assume a financial system has a monetary base of $25 million. The required reserves ratio is 10 percent, and there are no leakages in the system. What will be the system’s money supply?
$300 Million
$200 Million
$250 Million
$275 Million