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Classify each of the following in terms of their effect on interest rates (increase or decrease): I. Covenants on borrowing become more restrictive. II. The
Classify each of the following in terms of their effect on interest rates (increase or decrease): I. Covenants on borrowing become more restrictive. II. The Federal Reserve decrease the money supply. III. Total household wealth decreases. A. I increases, II increases, III increases B. I increases, II decreases, III decreases C. I decreases, II increases, III increases D. I decreases, II decreases, III decreases Bank A has an increase in deposits of $20 million dollars and all bank reserve requirements are 10 percent. Bank A loans out the full amount of the deposit increase that is allowed. This amount winds up deposited in Bank B. Bank B lends out the full amount possible as well and this amount winds up deposited in Bank C. What is the total increase in deposits resulting from these three banks? A. $48.00 million B. $54.20 million C. $56.33 million D. $57.10 million E. $60.00 million
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