2024 – Question 1 The Friendly National Bank holds 50 million in reserves at its Federal Reserve District Bank The required reserves ratio is

 Question#1

The Friendly National Bank holds $50 million in reserves at its Federal Reserve District Bank. The required reserves ratio is 12%.

 

a. If the bank has $600 million in deposits, what amount of vault cash would be needed for the bank to be in compliance with required reserves ratio. (show formula)

 

b. If he bank holds $10 million in vault cash, determine the required reserves ratio that would be needed for the bank to avoid a reserves deficit.(show formula)

 

c. If the Friendly National Bank experiences a required reserves deficit, what actions can it take to be in compliance with the existing required reserves ratio?(paragraph)

 

 

 

 

 

Question#2

 The Friendly National Bank holds $50 million in reserves at its Federal Reserve District Bank. The required reserves ratio is 12%.

 

a. If the bank has $600 million in deposits, what amount of vault cash would be needed for the bank to be in compliance with required reserves ratio

 

b. If he bank holds $10 million in vault cash, determine the required reserves ratio that would be needed for the bank to avoid a reserves deficit.

 

c. If the Friendly National Bank experiences a required reserves deficit, what actions can it take to be in compliance with the existing required reserves ratio?(paragraph)

 

 

 

Question#3

Assume that Banc One receives a primary deposit of $ million. The bank must keep reserves of 20% against its deposits .Prepare a simple balance sheet of assets and liabilities for Banc
One immediately after the deposit is received.

 

 

Question #4

 Assume a financial system has a monetary base of $25 million. The required reserves ratio is 10%, and there are no leakages in the system.

 

1. What is the size of the money multiplier?

2. What will be the system’s money supply?

Question#5

 If the US dollars value of a British Pound is $1.95 and a euro is $1.55, calculate the implied value of a euro in terms of British Pound.

 

Answers need to be completed in 3 days. !!