ECON:deposit creation+tariff

2009-04-23 8:11 pm

1.2003 econ(36)
Answer the following two questions by referring to the following balance sheet of a banking system. Required reserve ratio = 20%

Assets Liabilities
Reserves 500 Deposits 2000
Loans 1500

If the government increases the required reserve ratio to 40%, which of the following about the above banking system is correct?

A. The amount of reserves will increase to $800
B. The amount of deposits will not change
C. The maximum amount of loans will be $750
D. The maximum amount of deposits will be $1600

其實我都睇左SUGGESTED ANS,但我唔明白CALL BACK LOAN GE過程同reserve shortage點解會對deposit有影響。

2.我想問如果一個country對imported goods reduce a per-unit tariff，demand or supply in local market會唔會有影響??

http://hk.knowledge.yahoo.com/question/question?qid=7008051402329
我唔明白 (Since the cost of importing red wine decreases, the price for red wine will marginally decrease for local market. Therefore, it increases both the supply and demand for red wine.)

Decrease in price why is not decrease in the quantity demanded?but increase in both supply and demand?

謝謝。

回答 (1)

S™

2009-04-23 10:55 pm

✔ 最佳答案

1) if the autual reserve is less than the required reserve in the bank A after your withdrawal, then bank A will call back loans from the borrowers . The borrowers will withdraw money form bankB in order to pay back loans to bank A .

just imaging if there is only ONE BANK in the world , after your withdrawal ,the amount of autual reserve is less than the required reserve
and the case i mentioned above will happened.
so any contraction here will also affect the loans and deposit.

the answer of the question should be option C.
do you know how to calculate ? later i will show you if you wish.

2)actually if a country reduces a per-unit tariff on its imported goods,
the supply and QUANTITY DAMANDED of it will increase .

well ... refers to the website that you provided
the case is about the reduction of tariff on red wine . its the similar case as yours .most probably the reduction of tariff will just increase supply and QUANTITY DAMANDED . the demand increase or not will be affected by the other factors and there will be hints in the question if you are required to move the demand curve.

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