Author Question: Answer the following question based on the information given below: Deposits at the central bank = ... (Read 63 times)

justinmsk · **on:** Jun 30, 2018

Answer the following question based on the information given below: Deposits at the central bank = 400 U.S. Government Securities = 600 Checking Deposit = 1,700 Loans = 800 Stockholder's Equity = 70 Other Assets = 450 Other Liabilities = 380 Borrowing from the central bank = 250 Cash in the Vault = 150 If the reserve requirement is 20, the level of excess reserves equals:
a. 210
b. 440
c. 70
d. 550
e. Cannot be determined with this information.

Question 2

Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the quantity of real loanable funds per time period and reserve-related (central bank) transactions in the context of the Three-Sector-Model?
a. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions remain the same.
b. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions become more positive (or less negative).
c. The quantity of real loanable funds per time period falls, and reserve-related (central bank) transactions become more negative (or less positive).
d. The quantity of real loanable funds per time period rises, and reserve-related (central bank) transactions remain the same.
e. There is not enough information to determine what happens to these two macroeconomic variables.