Help with Economics Forumlas?

Posted on 2014-11-15 09:40:00 in Economics by NONYA

The midterm review gave me the answers, but that's all. No explanation. Can someone please explain to me WHY these are the answers??

1) In an Imaginary closed economy, GDP= $200; consumption= $120,000; Govt. Purchases= $35,000; taxes= $25,000. What does Investment amount to?
ANSWER: $45,000

2) People hold $400 milion of bank deposits but no currency. Banks have made $380 million dollars of loans and hold enough reserves to satisfy reserve requirements. Because of uncertainty, banks choose to hold $10 million more in reserves. Fed takes no action. What happens to bank loans?
ANSWER: They fall $200 million

3) A bank has $200,000 in deposits and $190,000 in loans. It has loaned out all it can. It has a reserve ratio of..
ANSWER: 5 percent.

Please help I am so lost. I really can't afford to fail this class.

---

Answer Comment

No Answers Posted Yet.