Would the maximum loan that a bank can make be different when receiving a discount loan from the Federal Reserve of $1 million versus receiving a checking account deposit of $1 million? Explain why or why not
What will be an ideal response?
They are different. Both increase the reserves at the bank by $1 million, but the bank does not have to hold required reserves against the discount loan because it is not a deposit. The entire $1 million of the discount loan is excess reserves, which the bank can loan out.
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From 1970 to 2006, the largest percentage increase in average real income for households in the United States occurred in which quintile?
A) the bottom quintile B) the second quintile C) the middle quintile D) the top quintile
The figure above shows the market for a good with an external benefit. When 6 units are produced, marginal social benefit equals ________ and marginal external benefit equals ________
A) $200; $150 B) $350; $200 C) $200; $50 D) $350; $150 E) $150; $250