Unit 7 hw - Hw assignment PDF

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Hw assignment ...

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1. Assume that the following asset values (in millions of dollars) exist in Ironmania: Federal Reserve Notes in circulation = $700; Money market mutual funds (MMMFs) held by individuals = $400; Corporate bonds = $300; Iron ore deposits = $50; Currency in commercial banks = $100; Savings deposits, including money market deposit accounts (MMDAs) = $140; Checkable deposits = $1500 ; Small-denominated (less than $100,000) time deposits = $100; Coins in circulation = $40. a. What is M1 in Ironmania? b. What is M2 in Ironmania? Answers: (a) $2,240 million; (b) $2,880 million.

6. Suppose the assets of the Silver Lode Bank are $100,000 higher than on the previous day and its net worth is up $20,000. By how much and in what direction must its liabilities have changed from the day before? Answer: $80,000 increase. 7. Suppose that Serendipity Bank has excess reserves of $10,000 and checkable deposits of $150,000. If the reserve ratio is 1%, what is the size of the bank's actual reserves? Answer: $25,000 8. The Third National Bank has reserves of $20,000 and checkable deposits of $100,000. The reserve ratio is 20 percent. Households deposit $5,000 in currency into the bank that is added to reserves. What level of excess reserves does the bank now have? Answer: its excess reserves are $4,000...