Exam 14: B: Money, Banking, and Money Creation

Consolidated balance sheet for the chartered banking system.Assume the desired reserve ratio is 10 percent.All figures are in billions. Refer to the above information.After a deposit of $10 billion of new currency into a chequing account in the banking system, excess reserves will increase by:

The desired reserve ratio refers to the ratio of a bank's:

Excess reserves are the amount by which desired reserves exceed actual cash reserves.

Refer to the information below.The chartered banking system has excess reserves of: Consolidated balance sheet for the chartered banking system.Assume the desired reserve ratio is 30 percent.All figures are in billions.

The value of money varies inversely with the price level.

The Vancouver Bank's balance statement is as follows: All figures are in billions. Refer to the above information and, assuming that desired reserve ratio is 10 percent, after a cheque for $20,000 is drawn and cleared against this bank, its excess reserve will be:

The following balance sheet is for the First Edmonton Bank.All figures are in millions. Refer to the above information.If this bank finds that it has excess reserves of $6, the desired ratio must be:

In the fractional reserve banking system:

If excess reserves in the banking system are $4,000, demand deposits are $40,000, and the desired reserve ratio is 10 percent, then actual cash reserves:

The following balance sheet shows the assets and liabilities of the ABC National Bank.Assume the desired reserve ratio is 20 percent. Refer to the above information.This chartered bank has excess reserves of:

For a bank, safety lies in:

The reserve ratio is equal to:

The value of money varies:

When chartered banks use excess reserves to buy government securities from the public:

A 15 percent increase in the price

Which of the banking systems is followed in Canada?

A bank owns a 10-story office building.In the bank's balance sheet, this would be an example of:

Individual chartered banks are limited in their ability to create money by lending because:

The reserves of a chartered bank consist of:

Assume the Standard Toy Company negotiates a loan for $5,000 from the Metro Bank and receives a demand deposit for that amount in exchange for its promissory note (IOU).As a result of this single transaction: