Exam 10: Credit Markets

Scenario: Alpha Bank has $100,000 in total assets and $45,000 in total liabilities. Beta Bank has $250,000 in total assets and $220,000 in total liabilities. -Refer to the scenario above.What would happen to each bank if its total assets dropped by 20 percent?

Assuming all else equal,a decrease in the real interest rate will cause ________.

Everything else remaining unchanged,what is likely to happen to the credit supply curve of an economy if firms tend to hold on to retained earnings instead of paying dividends?

If the real interest rate is equal to the nominal interest rate in an economy,________.

The following table lists some statistics on Boring Bank. -Refer to the table above.If Boring Bank faces a required reserve ratio of 10 percent and has twice as many excess reserves as required reserves,how much in total reserves does the bank have?

The following table shows a T-account for Bank A in a new economy. -Refer to the table above.If the required reserve ratio for Bank A changed to 10 percent,how much more in loans could the bank give out?

Scenario: Alpha Bank has $100,000 in total assets and $45,000 in total liabilities. Beta Bank has $250,000 in total assets and $220,000 in total liabilities. -Refer to the scenario above.What is Beta Bank's other option in the case of a bank run to avoid being taken over by the government if it cannot pay out all its deposits?

If Safeco Bank is shut down by the government,what possible scenarios could happen?

John is expecting to get a hike in his salary after 3 months.Assuming all else equal,this is likely to cause a(n)________ his current credit demand curve.

Illustrate graphically how the equilibrium quantity of credit and real rate of interest will change from an initial equilibrium if: a)credit demand decreases at the initial equilibrium rate of interest. b)credit supply increases at the initial equilibrium rate of interest.

An asset is liquid if ________.

The following table shows Free Donut Bank's balance sheet. Free Donut Bank has a required reserve ratio of 20 percent and has $75 in excess reserves. -Refer to the table above.What is the value of demand deposits?

The following table shows the balance sheet for Poor Baby Bank. -Refer to the table above.What is the value of stockholders' equity for Poor Baby Bank?

The following table lists some economic agents and their intentions. At present the interest rate is 5 percent. -Refer to the table above.Why might Mike decide to decrease his saving?

In banking terminology,what is meant by maturity? What is meant by maturity transformation?

The difference between a bank's assets and liabilities is referred to as ________.

Cash equivalents are ________.

The following table lists some statistics on Boring Bank. -Refer to the table above.If Boring Bank faces a required reserve ratio of 10 percent,has twice as many excess reserves as required reserves,and has total liabilities of $320,what is Boring Bank's stockholder equity?

The following table shows a T-account for Bank A in a new economy. -Refer to the table above.If Bank A maintained the same reserve ratio,but its deposits increased to $15,000,how much in reserves must the bank now hold?

Assuming all else equal,if the real interest rate increases,it will lead to ________.