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115 Cards in this Set
- Front
- Back
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1. Money
a. is more efficient than barter. b. makes trades easier. c. allows greater specialization. d. All of the above are correct. |
d. All of the above are correct.
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2. When we say that trade is round about we mean that
a. people sometimes trade goods for goods. b. trades require a double coincidence of wants c. currency is accepted primarily to make further trades. d. people must spend time searching for the products they wish to purchase. |
c. currency is accepted primarily to make further trades.
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3. Paper money
a. has a high intrinsic value. b. is the primary medium of exchange in a barter economy. c. is valuable because it is generally accepted in trade. d. is valuable only because of the legal tender requirement. |
c. is valuable because it is generally accepted in trade.
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4. Which of the following pairs have a double-coincidence of wants with each other?
a. Rupert with Amber, and Rob with Tom b. Amber with Tom c. Rupert with Rob d. None of the above have a double-coincidence of wants. |
c. Rupert with Rob
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5. Which if any pairs have a double coincidence of wants?
a. Bob with Alice b. Ted with Alice c. Bob with Mary, Ted with Bob, and Ted with Alice d. None of the pairs above have a coincidence of wants with each other |
b. Ted with Alice
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6. The existence of money leads to
a. greater specialization in production, but not a higher standard of living. b. a higher standard of living, but not greater specialization. c. greater specialization and a higher standard of living. d. neither greater specialization or a higher standard of living. |
c. greater specialization and a higher standard of living.
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7. Changes in the quantity of money affect
a. interest rates b. prices c. production d. All of the above are correct |
d. All of the above are correct
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8. Which of the following is a store of value?
a. currency b. U.S. government bonds c. fine art d. All of the above are correct. |
d. All of the above are correct.
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9. Which of the following best illustrates the unit of account function of money?
a. You list prices for candy sold on your Web site, www.sweettooth.com, in dollars. b. You pay for your WNBA tickets with dollars. c. You keep $10 in your backpack for emergencies. d. None of the above is correct. |
a. You list prices for candy sold on your Web site, www.sweettooth.com, in dollars.
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10. The “yardstick” people use to post prices and record debts is called
a. a medium of exchange. b. a unit of account. c. a store of value. d. liquidity. |
b. a unit of account.
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11. Mia puts money into a piggy bank so she can spend it later. What function of money does this illustrate?
a. store of value b. medium of exchange c. unit of account d. None of the above is correct. |
a. store of value
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12. Which of the following best illustrates the medium of exchange function of money?
a. You keep some money hidden in your shoe. b. You keep track of the value of your assets in terms of c. currency. You pay for your double latte using currency. d. None of the above is correct. |
c. currency. You pay for your double latte using currency.
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13. You get money for babysitting the neighbors' children. This best illustrates which function of money?
a. medium of exchange b. unit of account c. store of value d. liquidity |
a. medium of exchange
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14. Which of the following is a function of money?
a. a unit of account b. a store of value c. medium of exchange d. All of the above is correct. |
d. All of the above is correct.
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15. An item that people can use to transfer purchasing power from the present to the future is called
a. a medium of exchange. b. a unit of account. c. a store of value. d. None of the above is correct. |
c. a store of value.
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16. Treasury Bonds are
a. liquid, but not a store of value. b. a store of value, but not liquid. c. both liquid and a store of value. d. neither liquid nor a store of value |
c. both liquid and a store of value
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17. Which of the following functions of money is also a common function of most other financial assets?
a. a unit of account b. a store of value c. medium of exchange d. None of the above is correct. |
b. a store of value
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18. Economists use the word "money" to refer to
a. income generated by the production of goods and services. b. those assets regularly used to buy goods and services. c. the value of a person's assets. d. the value of stocks and bonds. |
b. those assets regularly used to buy goods and services.
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19. Liquidity refers to
a. the ease with which an asset is converted to the medium of exchange. b. a measurement of the intrinsic value of commodity money. c. the suitability of an asset to serve as a store of value. d. how many time a dollar circulates in a given year. |
a. the ease with which an asset is converted to the medium of exchange.
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20. Which list ranks assets from most to least liquid?
a. currency, fine art, stocks b. currency, stocks, fine art c. fine art, currency, stocks d. fine art, stocks, currency |
b. currency, stocks, fine art
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21. Current U.S. currency is
a. fiat money with intrinsic value. b. fiat money with no intrinsic value. c. commodity money with intrinsic value. d. commodity money with no intrinsic value. |
b. fiat money with no intrinsic value.
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22. Fiat money
a. has no intrinsic value. b. is backed by gold. c. has intrinsic value equal to its value in exchange. d. is any close substitute for currency such as checkable deposits. |
c. has intrinsic value equal to its value in exchange.
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23. Commodity money is
a. backed by gold. b. the principal type of money in use today. c. money with intrinsic value. d. receipts created in international trade that are used as a medium of exchange. |
c. money with intrinsic value.
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24. Fiat money
a. is worthless. b. has no intrinsic value. c. may be used as a medium of exchange, but is not legal tender. d. performs all the functions of money except providing a unit of account. |
b. has no intrinsic value.
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25. Which type of currency has intrinsic value?
a. commodity money b. fiat money c. both commodity money and fiat money d. neither commodity money nor fiat money |
a. commodity money
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26. If an economy used gold as money, its money would be
a. commodity money, but not fiat money. b. fiat money, but not commodity money. c. both fiat and commodity money. d. neither fiat nor commodity money. |
a. commodity money, but not fiat money.
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27. The legal tender requirement means that
a. people are more likely to accept the dollar as a medium of exchange. b. the government must hold enough gold to redeem all currency. c. people may not make trades with anything else. d. All of the above are correct. |
a. people are more likely to accept the dollar as a medium of exchange.
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28. M1 equals currency + demand deposits +
a. nothing else. b. other checkable deposits. c. traveler's checks + other checkable deposits. d. traveler's checks + other checkable deposits + savings deposits. |
c. traveler's checks + other checkable deposits.
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29. M1 includes
a. currency. b. demand deposits. c. travelers' checks. d. All of the above are correct. |
d. All of the above are correct.
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30. Which of the following is not included in M1?
a. currency b. demand deposits c. savings deposits d. travelers' checks |
c. savings deposits
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31. Which of the following is not included in M1?
a. currency b. demand deposits c. traveler’s checks d. credit cards |
d. credit cards
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32. Which of the following is included in M2 but not in M1?
a. currency b. demand deposits c. savings deposits d. All of the above are included in both M1 and M2 |
c. savings deposits
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33. Which of the following is included in M2 but not in M1?
a. demand deposits b. corporate bonds c. large time deposits d. money market mutual funds |
d. money market mutual funds
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34. Which of the following isn’tincludedineitherM1orM2?
a. U.S. Treasury bills b. small time deposits c. demand deposits d. money market mutual funds |
a. U.S. Treasury bills
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35. Which of the following is included in the M2 definition of the money supply?
a. credit cards b. money market mutual funds c. corporate bonds d. large time deposits |
b. money market mutual funds
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36. Money market mutual funds are included in
a. M1 but not M2. b. M1 and M2. c. M2 but not M1. d. neither M1 or M2. |
c. M2 but not M1.
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37. Demand deposits are a type of
a. checking account. b. time deposit. c. money market mutual fund. d. savings deposit. |
a. checking account.
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38. Demand deposits are included in
a. M1 but not M2. b. M2 but not M1. c. M1 and M2. d. neither M1 nor M2. |
c. M1 and M2.
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39. Credit card limits are included in
a. M1 but not M2. b. M2 but not M1. c. M1 and M2. d. neither M1 nor M2. |
d. neither M1 nor M2.
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40. Savingsdepositsareincludedin
a. M1 but not M2. b. M2 but not M1. c. M1 and M2. d. neither M1 nor M2. |
b. M2 but not M1.
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41. Which of the following is included in both M1 and M2?
a. savings deposits b. demand deposits c. small time deposits d. money market mutual funds |
b. demand deposits
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42. Credit cards
a. defer payments. b. are a store of value. c. have led to wider use of currency. d. are part of the money supply. |
a. defer payments.
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43. Credit cards
a. are included in M1 but not M2. b. are included in M1 and M2. c. are included in M2 but not M1 d. are not included in any measure of the money supply. |
d. are not included in any measure of the money supply.
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44. Debit cards
a. defer payments. b. are equivalent to credit cards. c. are included in M2. d. are used as a method of payment. |
d. are used as a method of payment.
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45. Which of the following defer payments?
a. credit cards and debit cards b. neither credit cards or debit cards c. credit cards but not debit cards d. debit cards but not credit cards |
c. credit cards but not debit cards
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46. Refer to Table 16-1. What is the M1 money supply?
a. $215 billion b. $216 billion c. $226 billion d. $301 billion |
b. $216 billion
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47. Refer to Table 16-1. What is the M2 money supply?
a. $125 billion b. $341 billion c. $421 billion d. $431 billion |
b. $341 billion48.
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48. Given the following information, what would be the values of M1 and M2?
a. M1 = $400 billion, M2 = $2,475 billion. b. M1 = $125 billion, M2 = $3,025 billion. c. M1 = $425 billion, M2 = $2, 450 billion. d. M1 = $425 billion, M2 = $1,875 billion. |
c. M1 = $425 billion, M2 = $2, 450 billion.
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49. The amount of currency per person in the United States is about
a. $200. b. $800. c. $1,600. d. $3,100. |
d. $3,100.
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50. In the US there is about $3,100 of
a. currency per person. b. demand deposits per person. c. M1 per person. d. M2 per person. |
a. currency per person.
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51. Which of the following might explain why the United States has so much currency per person?
a. U.S. citizens are holding a lot of foreign currency. b. Currency may be a preferable store of wealth for criminals. c. People use credit and debit cards more frequently. d. All of the above help explain the abundance of currency. |
b. Currency may be a preferable store of wealth for criminals.
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52. In the United States, per person
a. average currency holdings are about $800. One explanation for this relatively small average is that money people use credit and debit cards to make transactions. b. average currency holdings are about $800. One explanation for this relatively small average is that c. U.S. citizens hold a lot of foreign currency. average holdings of currency are about $3,100. One explanation for this relatively large amount is that criminals may prefer currency as a medium of exchange. d. average holdings are about $3,100. One explanation for this relatively large average is that U.S. citizens hold a lot of foreign currency. |
c. U.S. citizens hold a lot of foreign currency.
average holdings of currency are about $3,100. One explanation for this relatively large amount is that criminals may prefer currency as a medium of exchange. |
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53. One puzzle about the U.S. money stock is that
a. banks hold so much currency relative to the public. b. the public holds so much currency relative to banks. c. there is so little currency per person. d. there is so much currency per person. |
d. there is so much currency per person.
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54. The agency responsible for regulating the money supply in the United States is
a. the Comptroller of the Currency. b. the U.S. Treasury. c. the Federal Reserve. d. the U.S. Bank. |
c. the Federal Reserve.
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55. The Federal Reserve does all except which of the following?
a. control the supply of money b. control the value of money c. make loans to individuals d. regulate the banking system |
c. make loans to individuals
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56. Members of the Board of Governors
a. are appointed by the U.S. president, while presidents of the Federal Reserve regional banks are appointed by the banks' boards of directors. b. appointed by the banks' boards of directors while the presidents of the Federal Reserve regional banks are appointed by the U.S. president. c. and the presidents of the Federal Reserve regional banks are appointed by the U.S. president. d. and the presidents of the Federal Reserve regional banks are appointed by the banks' boards of directors. |
a. are appointed by the U.S. president, while presidents of the Federal Reserve regional banks are appointed by
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57. Each Federal Reserve District Bank president is appointed by
a. the US president with the approval of the Senate. b. the Board of Governors. c. the voting members of the FOMC. d. each bank's board of directors. |
d. each bank's board of directors.
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58. Which of the following executes open-market operations?
a. Board of Governors b. New York Federal Reserve Bank c. The FOMC d. None of the above is correct. |
b. New York Federal Reserve Bank
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59. What part of the Fed meets to discuss changes in the economy and determine monetary policy?
a. the Board of Governors b. the FOMC c. the regional Federal Reserve Bank presidents d. the Central Bank Policy Commission. |
b. the FOMC
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60. The New York Federal Reserve Bank
a. president always gets to vote at the FOMC meetings. b. conducts open market transactions. c. is located in the traditional financial center of the United States. d. All of the above are correct. |
d. All of the above are correct.
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61. The Board of Governors
a. is currently chaired by Paul Volcker. b. are appointed by the president and confirmed by the Senate. c. has twelve members. d. All of the above are correct. |
b. are appointed by the president and confirmed by the Senate.
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62. Which of the following is correct?
a. The Federal Reserve has 14 regional banks. The Board of Governors has 12 members who serve 7-year terms. b. The Federal Reserve has 14 regional banks. The Board of Governors has 7 members who serve 14-year terms. c. The Federal Reserve has 12 regional banks. The Board of Governors has 12 members who serve 7-year terms. d. The Federal Reserve has 12 regional banks. The Board of Governors has 7 members who serve 14-year terms. |
d. The Federal Reserve has 12 regional banks. The Board of Governors has 7 members who serve 14-year
terms. |
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63. Which of the following statements about the Federal Reserve is not correct?
a. The members of the Board of Governors are also presidents of the Federal Reserve's regional banks. b. The Federal Open Market Committee makes monetary policy. c. All members of the Board of Governors sit on the Federal Open Market Committee. d. The Federal Reserve serves as a bank regulator. |
a. The members of the Board of Governors are also presidents of the Federal Reserve's regional banks.
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64. Which of the following has a four-year term?
a. the members of the Board of Governors b. the Chair of the Board of Governors c. the members of the FOMC d. All of the above are correct. |
b. the Chair of the Board of Governors
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65. The 12 regional Federal Reserve Banks
a. are not allowed to make loans to banks in their districts. b. regulate banks in their districts. c. have more voting members on the FOMC than does the Board of Governors. d. are each headed by a member of the Board of Governors. |
b. regulate banks in their districts.
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66. Which of the following does the Federal Reserve not do?
a. conduct monetary policy b. act as a lender of last resort c. convert Federal Reserve Notes into gold d. serve as a bank regulator |
c. convert Federal Reserve Notes into gold
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67. The Federal Open Market Committee is made up of
a. 5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors. b. 5 Federal Reserve Regional Bank Presidents and 5 members of the Board of Governors. c. 12 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors. d. 12 Federal Reserve Regional Bank Presidents and 5 members of the Board of Governors. |
a. 5 Federal Reserve Regional Bank Presidents and all the members of the Board of Governors.
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68. Which of the following is not always a voting member of the FOMC?
a. the president of the New York Federal Reserve District Bank b. the Chairman of the Board of Governors c. a member of the Board of Governors other than the chair d. the president of the Boston Federal Reserve District Bank |
d. the president of the Boston Federal Reserve District Bank
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69. Monetary policy affects employment
a. only in the long run. b. only in the short run. c. in both the long run and the short run. d. in neither the long run nor the short run. |
b. only in the short run.
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70. The Fed’s primary tool to change the money supply is
a. changing the discount rate. b. changing the reserve requirement. c. conducting open market operations. d. redeeming Federal Reserve notes. |
c. conducting open market operations.
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71. When the Federal Reserve conducts open-market operations to increase the money supply, it
a. redeems Federal Reserve notes. b. buys government bonds from the public. c. raises the discount rate. d. decreases its lending to member banks. |
b. buys government bonds from the public.
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72. When the Fed conducts open-market purchases,
a. it buys Treasury securities, which increases the money supply. b. it buys Treasury securities, which decreases the money supply. c. it borrows money from member banks, which increases the money supply. d. it lends money to member banks, which decreases the money supply. |
a. it buys Treasury securities, which increases the money supply.
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73. When the Fed conducts open-market sales,
a. it sells Treasury securities, which increases the money supply. b. it sells Treasury securities, which decreases the money supply. c. it borrows from member banks, which increases the money supply. d. it lends money to member banks, which decreases the money supply. |
b. it sells Treasury securities, which decreases the money supply.
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74. When the Fed conducts open-market purchases,
a. it buys Treasury securities, which increases the money supply. b. it buys Treasury securities, which decreases the money supply. c. banks buy Treasury securities from Fed, which increases the money supply. d. banks buy Treasury securities from the Fed, which decreases the money supply. |
a. it buys Treasury securities, which increases the money supply.
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75. The Fed can increase the money supply by conducting open market
a. sales and raising the discount rate. b. sales and lowering the discount rate. c. purchases and raising the discount rate. d. purchases and lowering the discount rate. |
d. purchases and lowering the discount rate.
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76. The Fed can increase the price level by conducting open market
a. sales and raising the discount rate. b. sales and lowering the discount rate. c. purchases and raising the discount rate. d. purchases and lowering the discount rate. |
d. purchases and lowering the discount rate.
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77. Over one time horizon or another Fed policy decisions influence
a. inflation and employment. b. inflation but not employment. c. employment but not inflation. d. neither inflation nor employment. |
a. inflation and employment.
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78. There is a
a. short-run tradeoff between inflation and unemployment. b. short-run tradeoff between an increase in the money supply and inflation. c. long-run tradeoff between inflation and unemployment. d. long-run tradeoff between an increase in the money supply and inflation. |
a. short-run tradeoff between inflation and unemployment.
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79. The Fed can influence unemployment in
a. the short and long run. b. the short run, but not the long run. c. the long run, but not the short run. d. neither the short nor long run. |
b. the short run, but not the long run.
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80. In a 100-percent-reserve banking system,
a. banks can create money by issuing currency. b. banks can create money by lending out reserves. c. the Fed can increase the money supply with open-market sales. d. banks hold as many reserves as they hold deposits. |
d. banks hold as many reserves as they hold deposits.
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81. In a 100-percent reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits
a. M1 would increase. b. M1 would decrease. c. M1 would not change. d. M1 might rise or fall. |
c. M1 would not change.
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82. On a bank's T-account,
a. both deposits and reserves are assets. b. both deposits and reserves are liabilities. c. deposits are assets, reserves are liabilities. d. reserves are assets, deposits are liabilities. |
d. reserves are assets, deposits are liabilities.
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83. A bank’s
a. reserves and the deposits of its customers are both assets. b. reserves and the deposits of its customers are both liabilities. c. reserves are assets and the deposits of its customers are liabilities. d. reserves are liabilities and the deposits of its customers are assets. |
c. reserves are assets and the deposits of its customers are liabilities.
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84. A bank’s assets include
a. both its reserves and the deposits of its customers. b. neither its reserves nor the deposits of its customers. c. its reserves, but not the deposits of its customers. d. the deposits of its customers, but not its reserves. |
c. its reserves, but not the deposits of its customers.
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85. A bank’s liabilities include
a. both its reserves and the deposits of its customers. b. neither its reserves nor the deposits of its customers. c. its reserves, but not the deposits of its customers. d. the deposits of its customers, but not its reserves. |
d. the deposits of its customers, but not its reserves.
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86. A bank loans Zippo's Print Shop $350,000 to remodel a building near campus to use as a new store. On their balance sheets this loan is
a. an asset for the bank and a liability for Zippo's. The loan increases the money supply. b. an asset for the bank and a liability for Zippo's. The loan does not increase the money supply. c. a liability for the bank and an asset for Zippo's. The loan increases the money supply. d. a liability for the bank and an asset for Zippo's. The loan does not increase the money supply. |
a. an asset for the bank and a liability for Zippo's. The loan increases the money supply.
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87. Suppose that the reserve ratio is 5 percent and that a bank has $1,000 in deposits. Its reserves are
a. $5. b. $50. c. $95. d. $950. |
b. $50.
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88. Suppose that the reserve ratio is 10 percent and that a bank has $2,000 in deposits. Its reserves are
a. $20. b. $200. c. $1,880. d. $1,800. |
b. $200.
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89. Suppose a bank has a 10 percent reserve requirement,$ 5,000 in deposits, and has loaned out all it can given the reserve requirement.
a. It has $50 in reserves and $4,950 in loans. b. It has $500 in reserves and $4,500 in loans. c. It has $555 in reserves and $4,445 in loans. d. None of the above is correct. |
b. It has $500 in reserves and $4,500 in loans.
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90. Suppose a bank has a 10 percent reserve requirement, $4,000 in deposits, and has loaned out all it can given the reserve requirement.
a. It has $40 in reserves and $3,960 in loans. b. It has $400 in reserves and $3,600 in loans. c. It has $444 in reserves and $3,556 in loans. d. None of the above is correct. |
b. It has $400 in reserves and $3,600 in loans.
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91. Suppose a bank has $10,000 in deposits and $8,000 in loans. It has loaned out all it can. It has a reserve ratio of
a. 2 percent. b. 12.5 percent. c. 20 percent. d. 80 percent. |
c. 20 percent.
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92. Suppose 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
a. 2.5 percent. b. 5 percent. c. 9.5 percent. d. 10 percent. |
b. 5 percent.
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93. The manager of the bank where you work tells you that your bank has $5million in excess reserves. She also tells you that the bank has $300 million in deposits and $255 million dollars in loans. Given this information you find that the reserve requirement must be
a. 50/255. b. 40/255. c. 50/300. d. 40/300. |
d. 40/300.
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94. Suppose the banking system currently has $300 billion in reserves, that the reserve requirement is 10%, and that $3 billion of the reserves are excess reserves that will not be lent out. What is the value of deposits?
a. $3,300 billion b. $2,970 billion c. $2,700 billion d. $2,673 billion |
b. $2,970 billion
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95. If you deposit $100 of currency into a demand deposit at a bank, this action by itself
a. does not change the money supply. b. increases the money supply. c. decreases the money supply. d. has an indeterminate effect on the money supply. |
a. does not change the money supply.
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96. When a bank loans out $1,000, the money supply
a. does not change. b. decreases. c. increases. d. may do any of the above. |
c. increases
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97. Under a fractional reserve banking system,banks
a. hold more reserves than deposits. b. generally lend out a majority of the funds deposited. c. cause the money supply to fall by lending out reserves. d. All of the above are correct. |
b. generally lend out a majority of the funds deposited.
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98. Suppose that banks desire to hold no excess reserves the reserve ratio is 5 percent and a bank receives a new deposit of $1,000. This bank
a. will increase its required reserves by $50. b. will initially see its total reserves increase by $1,000. c. will be able to make a new loan of $950. d. All of the above are correct. |
d. All of the above are correct.
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99. Suppose banks desire to hold no excess reserves. If the reserve ratio is 10 percent and a bank receives a new deposit of $10. Then this bank
a. must increase required reserves by $1. b. will initially see its total reserves increase by $1. c. will be able to make new loans up to a maximum of $1. d. All of the above are correct. |
a. must increase required reserves by $1.
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100. Suppose that banks desire to hold no excess reserves. If the reserve ratio is 5 percent and a bank receives a new deposit of $400, it
a. must increase required reserves by $380. b. will initially see reserves increase by $380. c. will be able to use this deposit to make new loans. d. None of the above is correct. |
c. will be able to use this deposit to make new loans.
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101. If banks desire to hold no excess reserves, the reserve ratio is 10 percent, and a bank that was previously just meeting its reserve requirement receives a new deposit of $400, then initially the bank has a
a. $400 increase in excess reserves and no increase in required reserves. b. $400 increase in required reserves and no increase in excess reserves. c. $360 increase in excess reserves and $40 increase in required reserves. d. $40 increase in excess reserves and $360 increase in required reserves. |
c. $360 increase in excess reserves and $40 increase in required reserves.
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102. Suppose the Fed requires banks to hold 10% of their deposits as reserves. A bank has $20,000 of excess reserves and then sells the Fed a Treasury bill for $9,000. How much does this bank now have to lend out if it decides to hold only required reserves?
a. $29,000 b. $28,100 c. $19,100 d. $11,000 |
a. $29,000
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103. Suppose that banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10%. If you deposit $3,000 into First Hawkeye Bank,
a. Hawkeye’s required reserves increase by $300. b. Hawkeye will be able to lend out $2,700. c. Hawkeye’s assets and liabilities will both increase by $3,000. d. All of the above are correct. |
d. All of the above are correct.
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104. Refer to Table 16-2. The reserve ratio is
a. 0 percent. b. 20 percent. c. 80 percent. d. 100 percent. |
b. 20 percent.
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105. Refer to Table 16-2. If $1,000 is deposited into the First Bank of Mason City, and the bank takes no other actions, it’s
a. total reserves will increase by $200. b. liabilities will decrease by $1,000. c. assets will increase by $1,000. d. required reserves will increase by $800. |
c. assets will increase by $1,000.
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106. Refer to Table 16-2. If someone deposits $400 into the First Bank of Mason City,
a. the bank will be able to make additional loans totaling $320. b. excess reserves initially increase by $320. c. required reserves initially increase by $80. d. All of the above are correct. |
d. All of the above are correct.
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107. Refer to Table 16-3. If the reserve requirement is 10 percent, then this bank
a. is in a position to make a new loan of $15,000. b. has less reserves than required. c. has excess reserves of less than $15,000. d. None of the above is correct. |
c. has excess reserves of less than $15,000.
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108. Refer to Table 16-3. The reserve requirement is 10 percent and then someone deposits an additional $50,000 into the bank, then if the bank takes no other action it will
a. have $65,000 in excess reserves. b. have $55,000 in excess reserves. c. need to raise an additional $5,000 of reserves to meet the reserve requirement d. None of the above is correct. |
b. have $55,000 in excess reserves.
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109. Refer to Table 16-3. If the reserve requirement is 20 percent, this bank
a. has $10,000 of excess reserves. b. needs $10,000 more reserves to meet its reserve requirements. c. needs $5,000 more reserves to meet its reserve requirements. d. just meets its reserve requirement. |
c. needs $5,000 more reserves to meet its reserve requirements.
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110. Refer to Table 16-3. If the Last Bank of Cedar Bend is holding $10,000 in excess reserves, then the reserve requirement is
a. 2 percent. b. 5 percent. c. 7 percent. d. 10 percent. |
d. 10 percent.
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111. Refer to Table 16-4. If the Bank of Tampa has loaned out all the money it wants given its deposits, then its reserve ratio is
a. 1% b. 5% c. 10% d. 20% |
c. 10%
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112. Refer to Table 16-4. Assume that the Bank of Tampa is holding the required percent of deposits as reserves. Also, assume all other banks hold only the required percent of deposits as reserves and that people hold only deposits and no currency. What is the money multiplier?
a. 5 b. 10 c. 15 d. 20 |
b. 10
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113. Refer to Table 16-4. If the Fed requires banks to hold 5 percent of deposits as reserves, how much in excess reserves does the Bank of Tampa now hold?
a. $25 b. $50 c. $55 d. $75 |
b. $50
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114. Refer to Table 16-4. Assume that all other banks hold only the required 5 percent of deposits as reserves and that people hold only deposits and no currency. If the Bank of Tampa decides to hold exactly 5% reserves, by how much would the economy's money supply increase?
a. $500 b. $1,000 c. $1,500 d. $2,000 |
b. $1,000
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115. Refer to Table 16-5. If the Bank of Spring field has lent out all the money it can given its deposits, then what is its reserve ratio?
a. 1% b. 5% c. 10% d. 20% |
b. 5%
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