Author Question: If you deposit 8,000 in a bank, calculate how much the bank must keep as required reserves and how ... (Read 51 times)

ENagel · **on:** Jun 30, 2018

If you deposit 8,000 in a bank, calculate how much the bank must keep as required reserves and how much it can loan out if the required reserve ratio was 5 percent. If it was 8 percent? 13 percent? 26 percent?

Question 2

New Keynesians argue that a decrease in government spending reduces inflation.
a. True
b. False
Indicate whether the statement is true or false

Sammyo · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

With a required reserve ratio of 5 percent, required reserves = 400 and loanable funds = 7,600.

With a required reserve ratio of 8 percent, required reserves = 640 and loanable funds = 7,360.

With a required reserve ratio of 13 percent, required reserves = 1,040 and loanable funds = 6,960.

With a required reserve ratio of 26 percent, required reserves = 2,080 and loanable funds = 5,920.

Answer to Question 2

True