Question : 101) Consider a new deposit of $10 000 to the : 1384449

101) Consider a new deposit of $10 000 to the Canadian banking system. Assuming that all Canadian banks have a target reserve ratio of 2%, and that there is no cash drain, the banking system as a whole could create ________ as a result of this single new deposit.

A) $10 000 of new deposits

B) $50 000 of new deposits

C) $500 000 of new deposits

D) $980 000 of additional loans

E) $1 000 000 of additional loans

102) Consider a new deposit of $100 000 to the Canadian banking system. The commercial bank that initially receives this deposit will find itself with

A) no excess reserves if there is no reserve requirement.

B) $1000 of excess cash reserves if its target reserve ratio is 10%.

C) $2000 of excess cash reserves if its target reserve ratio is 2%.

D) $10 000 of excess cash reserves if its target reserve ratio is 10%.

E) $98 000 of excess cash reserves if its target reserve ratio is 2%.

103) If the Bank of Canada enters the open market and purchases $1000 of government securities, what will be the eventual change in the money supply given a 10% target reserve ratio in the commercial banking system?

A) decrease of $1000

B) decrease of $5000

C) decrease of $10 000

D) increase of $5000

E) increase of $10 000

104) If the Bank of Canada enters the open market and sells $1000 of government securities, what will be the eventual change in the money supply if commercial banks lend out all excess reserves and they have a 2.5% target reserve ratio?

A) decrease of $40 000

B) decrease of $4000

C) increase of $40 000

D) increase of $4000

E) decrease of $25 000

105) If the Bank of Canada enters the open market and sells $1000 of government securities, what will be the eventual change in the money supply given a 10% target reserve ratio in the commercial banking system and a 10% cash drain?

A) decrease of $1000

B) decrease of $5000

C) decrease of $10 000

D) increase of $5000

E) increase of $10 000

106) If the target reserve ratio in the banking system is 20%, there is no cash drain, and there are no excess reserves, a new deposit of $1 will lead to an eventual expansion of the money supply of

A) $0.20.

B) $1.20.

C) $2.00.

D) $5.00.

E) $20.00.

107) If the target reserve ratio in the banking system is 10%, there is no cash drain, and there are no excess reserves, a new deposit of $1 will lead to an eventual expansion of the money supply of

A) $0.01.

B) $0.10.

C) $1.00.

D) $10.00.

E) $100.00.

108) If the target reserve ratio in the banking system is 1%, there is no cash drain, and there are no excess reserves, a new deposit of $1 will lead to an expansion of the money supply of

A) $0.01.

B) $1.10.

C) $1.00.

D) $10.00.

E) $100.00.

109) Suppose Bank ABC has a target reserve ratio of 10%, no excess reserves, and it receives a new deposit of $500 000. This bank will initially expand its loans by

A) $50 000.

B) $450 000.

C) $500 000.

D) $4.5 million.

E) $5 million.

110) The expansion of deposits resulting from an injection of new cash to the banking system can be calculated as follows. The change in deposits is equal to

A) the change in loans divided by the sum of the target reserve ratio.

B) the change in reserves divided by the cash-deposit ratio.

C) the change in reserves divided by the target reserve ratio.

D) the change in reserves divided by the sum of the target reserve ratio and the cash-deposit ratio.

E) the change in reserves divided by the sum of excess reserves and cash drain.