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Decreased cash and gold reserves can significantly impact banks by limiting their liquidity and ability to meet withdrawal demands from customers. This situation may lead to tighter lending conditions as banks become more cautious in extending credit, potentially slowing economic growth. Additionally, reduced reserves can affect a bank's confidence and creditworthiness, leading to higher borrowing costs and a potential loss of customer trust. Overall, these factors can create a ripple effect throughout the financial system.
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If RRR 8 and a 1000 change in reserves yields a 9090 increase in the money supply what percentage of excess reserves do banks hold?
To calculate the percentage of excess reserves banks hold, we first need to determine the required reserves using the required reserve ratio (RRR) of 8%. If a $1,000 change in reserves leads to a $9,090 increase in the money supply, we can infer the total reserves needed to support that increase. The money multiplier is 9.09 (calculated as $9,090 increase in money supply divided by $1,000 change in reserves). Given the RRR of 8%, the required reserves would be $80 (8% of $1,000), and the excess reserves would be $920 ($1,000 total reserves - $80 required). Thus, the percentage of excess reserves is approximately 92%.
What would happen to the checkable deposits if banks purchase securities using reserves only and are not making loans?
well they will die
Are Liquidity Ratios the higher the better?
No. High liquidity ratios may affect the amount of capital that can be invested/used to earn. Let us say in banks, if we increase the liquidity ratio by 10% the bank would have to reduce lending by that 10% to bridge the gap. which in turn would severely affect the banks earnings.
How will the repo rate affect home loans?
Repo rate is the rate at which the banks can get loans from the country's central bank. If the rate at which banks get loans from the central bank goes down it would automatically affect the rate at which home loans are being granted. Say the repo rate is 6% then the banks may keep a margin of 4% and grant home loans at 10%. If the central bank opts to reduce the repo rate by 2% then the banks would have to pass on this benefit to the end customer. Hence the home loans would be available to the public at 8%.
Causes of recession?
One of the major causes of the recession American experienced in 2007 was due to the issues with mortgages. Banks gave loans to people who could not afford the mortgage on the home. Banks would then sell the loan to another bank. People who could not pay the loans would go into foreclosure. The asset value of the home decreased although the repayment of the debt remained the same.
Through open market operations the Federal Reserve buys and sells government securities to influence the supply of bank reserves. When the Fed wants to increase excess reserves held by banks it does w?
When the Federal Reserve wants to increase excess reserves held by banks, it conducts open market purchases of government securities. By buying these securities, the Fed injects liquidity into the banking system, increasing the reserves available to banks. This action encourages banks to lend more, potentially stimulating economic activity. Conversely, if the Fed wants to decrease reserves, it would sell government securities.
If RRR 8 and a 1000 change in reserves yields a 9090 increase in the money supply what percentage of excess reserves do banks hold?
To calculate the percentage of excess reserves banks hold, we first need to determine the required reserves using the required reserve ratio (RRR) of 8%. If a $1,000 change in reserves leads to a $9,090 increase in the money supply, we can infer the total reserves needed to support that increase. The money multiplier is 9.09 (calculated as $9,090 increase in money supply divided by $1,000 change in reserves). Given the RRR of 8%, the required reserves would be $80 (8% of $1,000), and the excess reserves would be $920 ($1,000 total reserves - $80 required). Thus, the percentage of excess reserves is approximately 92%.
What would happen to the checkable deposits if banks purchase securities using reserves only and are not making loans?
well they will die
Why do banks hold excess reserves?
They would hold excess reserves when conditions are such that they earn very little, or risks of loss are greater than interest reward or as now, 2/1/12, when the Federal Reserve is actually paying interest to the banks to keep reserves. There's now about $1.4 trillion of excess reserves of banks held at the Fed. It resulted from the Fed stuffing the bank "persons" with money lent at near zero interest to replace that which the banks destroyed with the liar loans and CDO- CDS securities. While 13 million human persons are unemployed, it's nutty to maintain such credit scarcity. But that's "free enterprise."
How would decreased diffusion across the arachnoid granulations affect the volume of the cerebrospinal fluid in the ventricles?
increase
What would happen if banks decide to keep more of their assets as reserves in order to avoid risking a shortage of required reserve?
The economy would slow dramatically due to a shortage of bank loans.
How would a decrease in blood volume affect both stroke volume and cardiac output?
It's decreased ... unless the rate falls, which is the normal cardiac response.
How does emphysema affect a person's alveoli?
*IT* Doesnt Emphyesma is when alveoli die. how does it affect them... Well it would affect them like it affects every other cell in the body. (decreased O2) but it acually doesnt affect the alveoli it just happens when they die
Are Liquidity Ratios the higher the better?
No. High liquidity ratios may affect the amount of capital that can be invested/used to earn. Let us say in banks, if we increase the liquidity ratio by 10% the bank would have to reduce lending by that 10% to bridge the gap. which in turn would severely affect the banks earnings.
What if Banks decide to keep more of their assets as reserves in order to avoid risking a shortage of the required reserve?
It would NOT shrink the money supply, it would just cause the supply of money to grow at a slower pace. So it would decrease the rate of growth of the money supply.
If the Fed were to impose a slight increase in the required reserves ratio there would be .?
If the Fed were to impose a slight increase in the required reserves ratio, there would be _____.
How will the repo rate affect home loans?
Repo rate is the rate at which the banks can get loans from the country's central bank. If the rate at which banks get loans from the central bank goes down it would automatically affect the rate at which home loans are being granted. Say the repo rate is 6% then the banks may keep a margin of 4% and grant home loans at 10%. If the central bank opts to reduce the repo rate by 2% then the banks would have to pass on this benefit to the end customer. Hence the home loans would be available to the public at 8%.
