Answer questions 1 and 2, on the basis of the following data: Checkable deposits
ID: 1196700 • Letter: A
Question
Answer questions 1 and 2, on the basis of the following data: Checkable deposits = 536.9 Bank reserves =55.6 Currency in circulation = 183.5 1] The M1 is ? what 2] The banks’ reserve ration is? What 3. When we speak of money's advantage over barter trade, we are primarily speaking of money's function as: 4. The fundamental explanation of why commercial banking system can create money lies in: 5. With a required 20% reserve ratio, a single bank, which receives cash deposits of $1,000, is available to lend out money up to: 6. Bank create money when they: 7. The power of the banking system to create the money supply is considerably restricted, if: 8. The interest rate represents : 9. When we speak of expressing the prices of goods in an economy, we are speaking of money’s function as: 10. Bank money is primarily provided by: 11. The simple deposit multiplier assumes that: 12. The Federal Reserve System’s Board of Governors: 13. When the Fed purchases securities in an open market operation, the Fed will: 14. Raising the interest rate tends to: 15. Which of the following is correct sequence? Where M = Money Supply; i = interest rate; I = investment 16. The three basic instruments of monetary policy are:
Explanation / Answer
1.M1 comprises of the most highly liquid assets, that is coin and currency in circulation, traveler's checks, demand deposits, and other checkable deposits.
M1 =Currency in circulation +Checkable deposits =720.40
2.
Minimum required reserves = Required
Reserve Ratio X Checkable deposits
So, reserve ratio=55.6/536.9=0.1