Question : 81) Refer to Table 27-3. Suppose the public decides to : 1384447

81) Refer to Table 27-3. Suppose the public decides to hold 15% of their deposits in cash – that is, there is now a cash drain of 15%. As a result of the new deposit, the money supply would eventually

A) increase by $ 3.75 million.

B) increase by $12.50 million.

C) decrease by $12.50 million.

D) decrease by $20.00 million.

E) not change.

82) Refer to Table 27-4. Bank XYZ is immediately in a position to

A) decrease its loans by $100 million.

B) decrease its loans by $10 million.

C) decrease its loans by $9 million.

D) increase loans by $9 million.

E) increase loans by $10 million

83) Refer to Table 27-4. Assume that Bank XYZ has decreased its loans and re-established its target reserve ratio. The second-generation banks in this scenario will

A) decrease their loans by $9.0 million.

B) decrease their loans by $8.1 million.

C) not have to change their loan positions.

D) increase their loans by $8.1 million.

E) increase their loans by $9.0 million.

84) Refer to Table 27-4. As a result of this withdrawal from the banking system, the Canadian banking system would eventually

A) decrease its loans by $100 million.

B) decrease its loans by $90 million.

C) decrease its loans by $10 million.

D) increase loans by $90 million.

E) increase loans by $100 million.

85) Consider the creation of deposit money in the banking system. One implication of an increase in the cash drain to the public is that the

A) banking system cannot create any additional money following a new deposit.

B) amount of new money that can be created from a new source of reserves is increased.

C) desired ratio is reduced.

D) desired reserve ratio is increased.

E) banking system’s ability to create new money following a new deposit is reduced.

86) Suppose you found a $100 bill that was lost for many years under your grandmother’s mattress and you decided to deposit this money in a commercial bank. If the target reserve ratio were 20% and all excess reserves were lent out, your new deposit of $100 would lead to an eventual expansion of the money supply of

A) $120.

B) $200.

C) $500.

D) $1200.

E) $2000.

87) Suppose you found a $100 bill that was lost for many years under your grandmother’s mattress. If the banking system has a cash drain of 5%, its target reserve ratio is 20%, and all excess reserves were lent out, your new deposit of the $100 bill would lead to an eventual expansion of the money supply of

A) $20.

B) $25.

C) $200.

D) $400.

E) $500.

88) If all the banks in the banking system collectively have $20 million in cash reserves and have a target reserve ratio of 5%, the maximum amount of deposits the banking system can support is

A) $4 million.

B) $40 million.

C) $80 million.

D) $100 million.

E) $400 million.

89) If all the banks in the banking system collectively have $500 million in cash reserves, and have a target reserve ratio of 5%, the maximum amount of deposits the banking system can support is

A) $10 million.

B) $100 million.

C) $25 billion.

D) $100 billion.

E) $10 billion.

90) Assume that Bank ABC has a target reserve ratio of 10%. If Bank ABC receives a new deposit of $100 000, the largest new loan this bank could initially make, and maintain its target reserve ratio, is

A) $  1000.

B) $ 10 000.

C) $ 90 000.

D) $100 000.

E) $900 000.