In the figure above, the leftward shift from the demand for ...

[segrsyd]

In the figure above, the leftward shift from the demand for loanable funds curve DLF1 to the demand for loanable funds curve DLF3, could be the result of
 
  A) the economy entering an expansion.
  B) the economy entering a recession.
  C) an increase in interest rates during an economic expansion.
  D) a decrease in interest rates during an economic recession.
  E) a government budget surplus.

Question 2

A bank reports reserves of 100,000, government securities of 250,000, loans of 750,000, checkable deposits of 900,000, and owners' equity of 200,000.
 
  The desired reserve ratio is 10 percent and the bank wants to hold as reserves only the amount it is required to hold. What is the amount of excess reserves for this bank? Show your work.

[jasonq]

Answer to Question 1

B

Answer to Question 2

Excess reserves equal the actual reserves minus the desired reserves. The actual reserves are 100,000. The bank desires to keep 10 percent of its checkable deposits as reserves, so the desired reserves are (900,

[segrsyd]

TYSM

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