When a commercial bank borrowers from a Federal reserve bank: A) it indicates that the commercial bank is unsound financially B) the commercial banks reserves are reduced C) the supply of money automatically increases D) the commercial banks lending ability is increased
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- Below is the balance sheet for a bank. Under "Other" it has listed "$X" just think of this as the dollar amount needed to make the balance sheet balance. It is not important what that value is for this question. AssetsLiabilitiesReserves 44Deposits 255Loans 155 Securities 51Other $X Using the balance sheet above, find the level of excess reserves this bank is holding if the required reserve ratio = 6%(Give answers to 2 decimal places as needed)Jlalt waiINIII5 auLiiUTLics eguiaLC 5latC paiin5 VVILIIU UL I DI C I15ui alILt. FDIC regulates and insure state banks that are not Fed members. The following are regulations put in place in US to reduce Risk in banking operations, EXCEPT: Restrictions on Bank Consolidation Regulation of Capital Requirements O Chartering and periodic Bank Examinations Disclosure RequirementsWhy was the Federal Reserve System set up withtwelve regional Federal Reserve banks rather than onecentral bank, as done in other countries?
- 8:29 1 v) Cai be ustu lu purtTiast tommvultits, but TIUL services. 18) Fiat money has A) little to no intrinsic value but is backed by the quantity of gold held by the central bank. B) a great intrinsic value that is independent of its use as money C) value, because it can be redeemed for gold by the central bank. D) little to no intrinsic value and is authorized by the central bank or governmental bodyRecognize thehistorical context ofthe development ofthe central bankingsystemIf the value of a bank's assets exceeds the value of its liabilities, the bank is Oliquid O illiquid solvent O insolvent
- Nobel Prize winner Franco Modigliani found that themost important transmission mechanisms of monetarypolicy involve consumer expenditure. Describe how atleast two of these mechanisms workThe bank you own has the following balance sheet Assets OA. You can go to the discount window. OB. You can call in or sell off loans. OC. You can borrow reserves in the federal funds market OD. Any of the above are appropriate actions to take Liabilities $75 million Reserves Loans Deposits Bank capital $525 million If the bank suffers a deposit outflow of $50 million with a required reserve ratio on deposits of 10%, what actions can you take to keep your bank from failing? $500 million $100 millionWhich of the following is considered a liability to a bank? Lütfen birini seçin: O A. the bank's loans O B. government securities O C. reserves O D. the bank's buildings and equipment O E. demand deposits
- Suppose that after a few mergers and acquisitions, onlyone bank holds 70% of all deposits in the United States.Would you say that this bank would be considered toobig to fail? What does this tell you about the ongoingprocess of financial consolidation and the governmentsafety net?Which of the folloving represents a change in today's banking policies that should prevent a recurrence of the bank panics of 1930-1933? O A. banks are more cautious lenders O B. banks keep large amounts of excess reserves on hand O . the FDIC insures bank deposits and therefore depositors do not panic and rush to withdraw money when individual banks have financial problems O D. the President now has the authority to close banks whenever panics occurAssuming an economy have only two commercial banks in it banking system, Classic Bank and Prudent Bank. The following shows the balance sheet of the two banks as at 2019.Classic BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 1,000 Deposits 3,000Securities 2,000 Equity 7,000Loans & Advances 1,000Property, Plant and Equipment 6,000 .10,000 10,000 Prudent BankBalance sheet as at December, 2019GHSm GHSmAssets: Liabilities & Equity:Reserves 600 Deposits 2,500Securities 1,500 Equity 4,400Loans & Advances 800Property, Plant and Equipment 4,000 .6,900 6,900Assume a required reserve ratio of 10%.(a) What is the amount of excess reserves in this commercial banking system? (b)What is the maximum amount that the money supply can be expanded? What would be the effect of a fall in reserve ratio to 5%, on the maximum amount that the money supply can be expanded? (c) Determine the stock of broad money supply assuming the non-bank public holds…
