Exam 28: The Financial Sector and the Economy

A single bank has a reserve requirement of 10 percent. This means that if a customer deposits $100 million, the bank may increase lending by:

The actual reserve ratio is usually:

If the reserve ratio is 10%,what is the value of the simple money multiplier? If bank reserves are $10,000,what is the total quantity of demand deposits those reserves can support (assuming the simple money multiplier is the appropriate multiplier to use)?

M1 consists primarily of cash in the hands of the public and:

If the financial sector causes more to flow into spending than is saved, most likely:

If the required reserve ratio is 0.12, the amount a bank can lend is equal to:

The process of packaging a variety of loans together and slicing them up into new financial instruments is called:

When the interest rate rises, people are:

When people hold financial assets in the form of money, they:

If the reserve requirement is 10 percent, and banks keep no excess reserves, an increase in an initial $300 into the banking system will cause an increase in total money of:

A high-risk premium makes default more likely.

As long as money serves as a medium of exchange, it also serves as a store of wealth.

The present value of an asset generally:

Money doesn't have to have any inherent value to function as a medium of exchange.

Which of the following are examples of financial assets that pay a short-term interest rate?

If people hold onto money as cash rather than depositing it, the money multiplier will:

The goldsmith's ability to create money was based on the fact that:

When a clerk gives you a pair of jeans for your $50 bill, money is serving which function?

The amount of reserves in the economy is often determined by the amount of money in the economy that will achieve a particular interest rate. This reflects the fact that the money supply is:

Given a required reserve ratio of 10 percent for all banks, total bank reserves of $400 billion could support maximum deposits of: