macroeconomics

Question 5 Assets Liabilities Reserve $100,000 Deposits $500,000 loans $200,000 Securities $200,000 Total: $500,000 Total: $500,000 1) What is the required reserve ratio? * 25% 3036 2096 1096 2) If the central bank decreased the required reserve ratio to 5%, then loans will * Increase by $25,000 Decrease by $75,000 Increase by $75,000 d) Decrease by $25,000 3) Assume that the central bank bought $100,000 of Government securities through open market purchases. What is the effect of this purchase on the money supply? * Money supply increases by $100,000 Money supply increases by $500,000 Money supply decreases by $5,000 Money supply increases by $5,000 Assume that the central bank bought $100,000 of Government securities through open market purchases. What is the effect of this purchase on the reserves of the bank? * Reserves decreases by $100,000 Reserves will not change Reserves will increases by $1,000,000 Reserves increases by $100,000 5) Assume that the central bank bought $100,000 of Government securities through open market purchases. What can you conclude about the state of the economy?* Recessionary gap Inflationary gap Expansion Contraction