Be fast pls urgent If the Commercial Bank borrows an additional total of $200 million from the Central Bank but depositors withdraw $80 million and hold it as currency, what happens to reserves and the monetary base? Use T-accounts to explain your answer.

Be fast pls urgent If the Commercial Bank borrows an additional total of $200 million from the Central Bank but depositors withdraw $80 million and hold it as currency, what happens to reserves and the monetary base? Use T-accounts to explain your answer.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter13: The Federal Reserve System

Section13.3: Other Fed Tools And Recent Fed Actions

Problem 3ST

See similar textbooks

Related questions

Q: Economic growth is said to be a necessary but not sufficient condition to eradicate absolute poverty…

A: Economic growth refers to the expansion in a nation's production of goods and services over a period…

Q: 3) Draw the IS-MP framework and show the effect of a rise in liquidity risk in the economy. Show up…

A: The IS-MP (Investment-Saving and Monetary Policy) framework is a macroeconomic model that combines…

Q: draw a graph using this information the article discusses a decrease in the demand for certain jobs…

A: Labor demand curve: The labor demand curve represents the relationship between the quantity of labor…

Q: Almost all states levy sales taxes on retail products, but about half of them exempt purchases of…

A: Tax exemptions are policies implemented by governments to avoid taxing goods or services.When it…

Q: Price or Cost (dollars per unit) Social MC Private MC 200 320 Quantity (units per time period) O…

A: External costs or negative externalities are the harmful side effects that arise out of the…

Q: A water resources project has benefits that equal $50,000 at the end of the first year and increase…

A: Benefit at the end of year 1 = $50,000Benefit at the end of year 5 = $250,000From year 1 to year 5,…

Q: The following table lists several determinants of aggregate demand. Fill in the missing values in…

A: The concept of aggregate demand is macroeconomic. It is the aggregate measurement of demand in the…

Q: TRUE - OR - FALSE Using fiscal policy to increase aggregate demand may have undesirable inflationary…

A: Fiscal policy refers to the government's use of its spending, taxation, and borrowing policies to…

Q: raffic Lights in Plymouth) Look at the figure Traffic Lights in Plymouth. Plymouth has 1,000…

A: The public good refers to good that satisfies two conditions: non-exclusion and non-rival.…

Q: 0.33 is the right answer for the first part. I just want to know how they got 0.33. Also the second…

A: It is a measure of national inequality. It tracks the distribution of income among the various…

Q: 7. MRS and utility maximization Suppose your classmate Eleanor loves to eat dessert-so much so that…

A: Utility is the satisfying power of a commodity. Consumers' main goal is to maximize the given…

Q: Use the diagram below, which indicates maximum combinations of good X and good Y that can be…

A: The PPF is also referred to as the production possibility curve (PPC). It is a key economic concept…

Q: 6. Why the aggregate supply curve slopes upward in the short run In the short run, the quantity of…

A: The reason behind the upward sloping of the aggregate supply curve is the sticky price. The theory…

Q: A federal budget surplus occurs when government expenditures exceed tax revenues. O True O False

A: Federal Reserve:In macroeconomics, the Federal Reserve is the central bank (CB) of the United States…

Q: C = 100+0.8(1-t)Y I = 200- 1000i L = 1/2Y-7000i G= 700 t = 0.33 M/P = 500 a) using the IS -…

A: The IS-LM macroeconomic model shows the relationship between interest rates and output in the…

Q: The production possibility curve shows all the following except a. Economic growth O b. The law of…

A: PPF: Graphical representation of the combination of two goods that can be produced in the economy in…

Q: Econoline Company produces only two goods and they operate with limited resources. The production…

A: A graphical depiction known as the Production Possibility Frontier illustrates the highest possible…

Q: A monopoly is considering selling several units of a homogeneous product as a single package.…

A: A monopoly is a market structure characterized by a single seller, selling a unique product in the…

Q: Assume that the market for onions is competitive/perfectly competitive market. Further assume that…

A: Perfect competition is a market structure with many small firms producing identical products. Entry…

Q: The graph below shows the cost and revenue curves for IchiBan Inc., a monopolist. Revenues and costs…

A: Monopolistic attempting or actually possessing total control over something, particularly a business…

Q: In the fictionaltown ofWilsonville, there's a bustling localeconomy with numerous firms…

A: In the diagram you've provided, which represents a basic circular flow model of an economy, the…

Q: The following graph gives the demand (D) curve for water services in the fictional town of…

A: A monopoly firm produces at the intersection of MR and MC curves. Hence, the monopoly outcome occurs…

Q: oday, you have $35,000 to invest. Two investment alternatives are available to you. One would…

A: The cash flow schedule is represented below:YearAlternative 1Alternative…

Q: QUESTION 20 Study the table below which represents the cost and price schedules facing a perfectly…

A: Business economics is the study of how organizations make decisions and allocate resources in the…

Q: Which countries discount value of dollar?

A: An exchange rate is the price of one currency in terms of another currency. It represents the rate…

Q: based on the table above, is the exchange rate of dollars to pounds fixed or flexible? Explain

A: The exchange rate between the United States dollar (USD) and the British pound (GBP) is a dynamic…

Q: Based on the best available econometric estimates, the market elasticity of demand for your firm’s…

A: Elasticity of demand = -2.5Marginal cost of production = 225Average total cost (current ) = 300 We…

Q: Suppose that after an excise tax was imposed on sofas, the price buyers paid for sofas increased by…

A: Taxation is an essential component of the modern economy, serving as a major source of money for…

Q: What happens if there is a shortage or a surplus of Canadian dollars in the foreigh exchange market?…

A: The foreign exchange market shows the equilibrium exchange rate and the equilibrium quantity of…

Q: Price ($) 40 36 32 28 24 20 16 12 00 4 0 4 8 12 16 20 24 28 32 36 40 Quantity per period a. If the…

A: Elasticity measures the percentage change in quantity due to percentage change in price. The price…

Q: Suppose the UK has 50 hours of labor available, and the US has 100 hours of labor available. Each…

A: When resources are limited, allocative efficiency describes the best way to divide up existing…

Q: Create a diagram with axes representing the quantities of XA and XB. Plot the original and new…

A: Substitution effect measures the change in the quantity of the commodity when the price of the…

Q: Suppose that x is a normal good and y is an inferior good. The Marshallian demand functions for…

A: The Marshallian demand function, named after the economist Alfred Marshall, is a basic idea in…

Q: Data for an economy shows that the unemployment rate is 10%, the participation rate 75 percent, 200…

A: Employed individuals are those who contribute their labor to the production of goods or services,…

Q: An economy at a full-employment equilibrium experiences an increase in aggregate demand. The…

A: An economy will experience a stable aggregate whenever each employee has a stable income level. The…

Q: Use the following figure to answer the next question. C MC ATC AVC At which point does marginal cost…

A: This can be defined as a cost that shows the type of cost that an individual, business, or any other…

Q: Imagine you are a manager at Power Boost Waters. Your company is known for producing bottled water…

A: Marginal cost is a fundamental concept in economics that represents the additional cost incurred by…

Q: 7. A monopolist in the steel industry engages in Block Pricing. The prices the firm charges are…

A: A monopolist is able to use price discrimination. Price discrimination occurs when different prices…

Q: 3 b. C. the aggregate demand curve. Draw the AE curve for this case. Suppose an increase in the…

A: Aggregate demand is the total demand generated within macro economy, given the parameters like…

Q: Consider a firm with the production function F(K, L) = Kº.8 Lº.2 10. (Concretely, imagine that due…

A: Elasticity of substitution measures the percentage change in capital-labor ratio due to percentage…

Q: a) Explain how real interest rate affects net exports b) A friend from the U.S. visited Ghana and…

A: a) The real interest rate affects net exports through its impact on the exchange rate. When the real…

Q: Scenario 21-3 Scott knows that he will ultimately face retirement. Assume that Scott will experience…

A: Saving alludes to the demonstration of setting to the side a part of one's income or resources for…

Q: 3. The effect of negative externalities on the optimal quantity of consumption Consider the market…

A: Externalities occur when there is an indirect impact on a party that is not directly related to the…

Q: Suppose a small open economy with a fixed exchange rate experiences negative aggregate demand…

A: Exchange rate refers to the conversion of one currency into another currency. It is the price of one…

Q: The following is a list of events that occur during an economic expansion. Drag and drop them in the…

A: Economic events generally occur in cyclic form, subject to sudden shocks as well as influences. The…

Q: Which of the following factors are responsible for seasonal and circular migration? A. Tourism B.…

A: Let's break down each of the choices you've provided to understand how they may influence seasonal…

Q: a) Explain how real interest rate affects net exports b) A friend from the U.S. visited Ghana and…

A: a) Explanation of how real interest rate affects net exports:Real interest rate is the nominal…

Q: Suppose the annual nominal interest rate is 7 percent and the inflation rate is 7 percent. If you…

A: This can be defined as a concept that shows a given nominal amount refers to how many units of…

Q: A computer virus infects critical manufacturing equipment around the country, resulting in partial…

A: A model used in macroeconomics is the (AD/AS) model. It clarifies how an economy's price level and…

Q: Be fast Suppose there are three (3) consumers in a market for bottles of perfume; Mutumbu, Jasanu…

A: Market demand basically refers to the total quantity of a good or service that consumers in a…

Question

Be fast pls urgent

If the Commercial Bank borrows an additional total of $200 million from the Central Bank but depositors withdraw $80 million and hold it as currency, what happens to reserves and the monetary base? Use T-accounts to explain your answer.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Define central bank

VIEW

Step 2: Explain what happens to reserves and the monetary base

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

All other things being equal, by how much will nominal GDP expand if the central bank Increases the money supply by 100 billion, and the velocity of money is 3? (Use this information as necessary to answer the following 4 questions.)
List the three traditional tools that a central bank has for controlling the money supply.
Isabella takes $100 of currency from her wallet anddeposits it into her checking account. If the bankadds the entire $100 to reserves, the money supply_________, but if the bank lends out some of the$100, the money supply _________.a. increases; increases even moreb. increases; increases by lessc. is unchanged; increasesd. decreases; decreases by less
List and explain 3 of the determinants of the demand for money. Foreach, how might they have changed in the last year due to COVID-19 andhow would this affect demand for money?
Assume the Federal Reserve inserts $25,000 of reserves into the banking system (don't worry about how this is done for now). What isthe maximum amount deposits will increase by assuming banks hold zero excess reserves and all currency is deposited? Please round totwo decimal places where needed and do not enter the dollar sign ($).
Select TWO true statements about money. Base money is equal to cash plus commercial bank reserves with the central bank O b. Cash is a liability of the central bank O c. If a commercial bank makes a loan and credits the borrower's current account, then base money increases O d. Commercial bank reserves with the central bank appear as a liability in their balance sheets a.
Explain whether each of the following eventsincreases or decreases the money supply.a. The Fed buys bonds in open-market operations.b. The Fed reduces the reserve requirement.c. The Fed increases the interest rate it pays onreserves.d. Citibank repays a loan it had previously takenfrom the Fed.e. After a rash of pickpocketing, people decide tohold less currency.f. Fearful of bank runs, bankers decide to hold moreexcess reserves.g. The FOMC increases its target for the federalfunds rate.
How is the amount of reserves banks hold related to the amount of money the banking system creates? Assume that Lucky Bank is required to hold a 10% deposits as reserves, and there is a $3000 increase in demand deposits. Calculate the money multiplier? Use Microsoft equation tool where needed to show all equations or notations. How much additional new demand deposits could the $3,000 deposit support?
If a bank sells $10 million of bonds to the Fed to payback $10 million on the loan it owes, what is the effecton the level of checkable deposits?
Which of the following represents an action by the central bank designed to decrease the money supply? Select one: a. a decrease in the required reserve ratio O b. buying government securities an increase in the discount rate C. d. a increase in tax rates
Assume that the Habib Bank of Pakistan has total reserves of Rs. 50 Million. Assume also that required reserves are 15 percent of checking deposits and that bank hold no excess reserves and households hold no currency. Show a T-account for Habib Bank Calculate the money multiplier and Calculate the money supply If the State Bank of Pakistan now raises required reserves to 25 percent of deposits, What will be the effect on money multiplier? . What will be the effect on Reserves? What will be the effect on money Supply?
Currency M1 Money supply measure Venn diagram M2 Currency mitows M1 M2 • Traveler's checks • Checkable deposits In 6-1 we studied the effects of the money supply and looked at different measures of money. Indicate the measures of money that would increase as a result of the following secnario. Sam's grandmother Tina decides to finally deposit all of the money she has been keeping under her mattress in a comerical savings account. Select the correct answer. • Savings deposits • Time deposits • Money market mutual funds