The Fed buys $2 million of securities from AIG. If AIGs bank has a desired reserve ratio
Question:
The Fed buys $2 million of securities from AIG. If AIG’s bank has a desired reserve ratio of 0.1 and there is no currency drain, calculate the bank’s excess reserves as soon as the open market purchase is made, the maximum amount of loans that the banking system can make, and the maximum amount of new money that the banking system can create.
If the desired reserve ratio is 5 percent, the currency drain ratio is 20 percent of deposits, and the central bank makes an open market purchase of $1 million of securities, calculate the change in.
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 45% (11 reviews)
Excess reserves actual reserves desired reserves The new reserves created ...View the full answer
Answered By
Tobias sifuna
I am an individual who possesses a unique set of skills and qualities that make me well-suited for content and academic writing. I have a strong writing ability, allowing me to communicate ideas and arguments in a clear, concise, and effective manner. My writing is backed by extensive research skills, enabling me to gather information from credible sources to support my arguments. I also have critical thinking skills, which allow me to analyze information, draw informed conclusions, and present my arguments in a logical and convincing manner. Additionally, I have an eye for detail and the ability to carefully proofread my work, ensuring that it is free of errors and that all sources are properly cited. Time management skills are another key strength that allow me to meet deadlines and prioritize tasks effectively. Communication skills, including the ability to collaborate with others, including editors, peer reviewers, and subject matter experts, are also important qualities that I have. I am also adaptable, capable of writing on a variety of topics and adjusting my writing style and tone to meet the needs of different audiences and projects. Lastly, I am driven by a passion for writing, which continually drives me to improve my skills and produce high-quality work.
5.00+
1+ Reviews
10+ Question Solved
Related Book For
Question Posted:
Students also viewed these Business questions
-
Describe what is likely to happen to interest rates, deposits, and total bank reserves as a result of the transactions listed below: a. The Federal Reserve sells $50 million in securities outright to...
-
In the late 1980s, General Electric Company (GE), whose CEO at the time was Jack Welch, acquired Kidder Peabody, an investment banking firm founded in 1824. In 1991, Kidder hired a bond trader named...
-
A company buys $2 million of goods each year. The treasurer of the company thinks it can delay paying bills up to 45 days without jeopardizing its relationship with suppliers. The companys accounts...
-
The reconciling item in a bank reconciliation that will result in an adjusting entry by the depositor is: (a) outstanding checks. (b) deposit in transit. (c) a bank error. (d) bank service charges.
-
(a) For BCC iron, compute the radius of a tetrahedral interstitial site. (See the result of Problem 4.9.) (b) Lattice strains are imposed on iron atoms surrounding this site when carbon atoms occupy...
-
A company buys a machine for $61,700 on January 1, 2010. The maintenance costs for the years 2010-2013 are as follows: 2010, $4,900; 2011, $4,700; 2012, $12,400 (includes $7,800 for cost of a new...
-
Franks Marine Service purchased a forklift five years ago for \($16,000\). When it was purchased, the forklift had an estimated useful life of 10 years and a residual value of $4,000. The forklift...
-
Several years ago Brant, Inc., sold $900,000 in bonds to the public. Annual cash interest of 9 percent ($81,000) was to be paid on this debt. The bonds were issued at a discount to yield 12 percent....
-
14-29. COST-PLUS, TARGET RETURN ON INVESTMENT PRICING. ChocAttack makes candy bars for vending machines and sells them to vendors in cases of 30 bars. Although ChocAttack makes a variety of candies,...
-
Shenira is a resident of the Republic. She is 30 years old. She is married in community of property. Her husband did not earn any passive income. The following information relates to the 2021 year of...
-
The monetary base and the change in its components. If the desired reserve ratio is 5 percent, the currency drain ratio is 20 percent of deposits, and the central bank makes an open market purchase...
-
Cindy takes a summer job and earns an after-tax income of $8,000. Her living expenses during the summer were $2,000. What was Cindys saving during the summer and the change, if any, in her wealth?
-
A closed tank contains a vapor-liquid mixture of steam at 45 bar with liquid content 25% by mass. a) The pressure is changed to 80 bar. What is the temperature? b) The pressure is changed until the...
-
Based on "The Next Management Breakthrough: EPM, Non-GAAP Measures and KPIs in a Digital World," https://mydigitalpublication.com/publication/?i=652870&ver=html5&p=32 What are some challenges of...
-
A company has two service departments (S1 and S2) and two production departments (P1 and P2).Departmental data for August 2018 were as follows: [S1 and S2] Cost incurred:P54,000, P36,000 Service...
-
Find a solution to Laplace's equation and boundary conditions Uxx + Uyy = 0, u(x, 0) = cos(2x), u(x, 1) = 0, ux(0, y) = 0, ux(1, y) = 0. Solve Laplace's equation on an annulus 1
-
Prove this equation gt2 2vit 2h = 0 - equal to t = [1 + 1 2hg 1+ vz
-
A company issues $500,000 of 9% bonds due in 10years in 1/1/2022, with interest payable semiannually, the market interest rate in that date was 10%, the company retire half of the bonds in 30/06/2024...
-
Iqbal Ltd started trading on 1 July 2010. During the first five years of trading, the following occurred: Required: Assume that the company paid the maximum legal dividend each year. Under normal...
-
The polar coordinates of a point are given. Find the rectangular coordinates of the point. (-1, - /3)
-
Explain how Whole Foods decision will change the deadweight loss created by plastic straws. Whole foods to become first national supermarket to ban plastic straws Whole Foods is set to completely ban...
-
The first table shows the demand schedule for electricity from a coal-burning utility. The second table shows the utilitys cost of producing electricity and the external cost of the pollution...
-
The first table shows the demand schedule for electricity from a coal-burning utility. The second table shows the utilitys cost of producing electricity and the external cost of the pollution...
-
In the long run, nominal wages are: sticky upward but flexible downward. sticky downward but flexible upward. sticky both upward and downward. flexible, because contracts and informal agreements are...
-
Appendix A: Hardware & Software Basics - Module SummaryOverview Appendix A provides an overview of the importance of learning technical architecture, emphasizing its role in equipping individuals...
-
1. Sharing buffers to handle multiple sources of variability is referred to a. buffering b. overflow c. concentrator d. pooling 2. A cost-effective approach to reducing buffering costs in a...
Study smarter with the SolutionInn App