Question 1

If the required reserve ratio is 10 percent and a bank receives a new deposit for $100,000,then the:

Accepted Answer

A) bank must keep $5,000 in excess reserves. 
B) bank's required reserves increase by $45,000. 
C) bank's liabilities increase by $100,000. 
D) bank can increase its loans by up to $50,000. 
E) bank can increase its loans by up to $400,000. 
A) bank must keep $5,000 in excess reserves. 
B) bank's required reserves increase by $45,000. 
C) bank's liabilities increase by $100,000. 
D) bank can increase its loans by up to $50,000. 
E) bank can increase its loans by up to $400,000.

Question 2

One of the main functions of the Fed is minting U.S.coins.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following measures did the Fed take during the uncertain days following the terrorist attacks of September 11,2001?

Accepted Answer

A) The Fed tightened regulations in the financial markets. 
B) The Fed increased the discount rate. 
C) The Fed bought all the government securities up for sale. 
D) The Fed increased the reserve requirement ratio. 
E) The Fed demanded interest on the bank reserves held at the Fed. 
A) The Fed tightened regulations in the financial markets. 
B) The Fed increased the discount rate. 
C) The Fed bought all the government securities up for sale. 
D) The Fed increased the reserve requirement ratio. 
E) The Fed demanded interest on the bank reserves held at the Fed.

Question 4

Which of the following statements is correct?

Accepted Answer

A) To control the money supply,the Fed relies primarily on the reserve requirement. 
B) The discount rate is the rate of interest banks charge to their best customers. 
C) The Fed changes the reserve requirement frequently. 
D) Because the Fed has no way to earn income,it is dependent upon Congress for appropriations. 
E) Banks can turn a borrower's IOU into money. 
A) To control the money supply,the Fed relies primarily on the reserve requirement. 
B) The discount rate is the rate of interest banks charge to their best customers. 
C) The Fed changes the reserve requirement frequently. 
D) Because the Fed has no way to earn income,it is dependent upon Congress for appropriations. 
E) Banks can turn a borrower's IOU into money.

Question 5

If the simple money multiplier is 5,the required reserve ratio must be equal to _____.

Accepted Answer

A) 5 percent 
B) 0 
C) 10 percent 
D) 50 percent 
E) 20 percent 
A) 5 percent 
B) 0 
C) 10 percent 
D) 50 percent 
E) 20 percent

Question 6

The simple money multiplier:

Accepted Answer

A) equals the reciprocal of the required reserve ratio. 
B) assumes banks hold excess reserves. 
C) becomes larger as the required reserve ratio increases. 
D) equals required reserves plus excess reserves. 
E) equals total reserves minus required reserves. 
A) equals the reciprocal of the required reserve ratio. 
B) assumes banks hold excess reserves. 
C) becomes larger as the required reserve ratio increases. 
D) equals required reserves plus excess reserves. 
E) equals total reserves minus required reserves.

Question 7

Banks minimize the risk of loss to depositors by:

Accepted Answer

A) lending to government officials. 
B) making many different loans to different borrowers. 
C) refusing to lend money to the U.S.government. 
D) lending to the richest 1 percent of the population. 
E) making very long-term loans. 
A) lending to government officials. 
B) making many different loans to different borrowers. 
C) refusing to lend money to the U.S.government. 
D) lending to the richest 1 percent of the population. 
E) making very long-term loans.

Question 8

Currency held by the nonbanking public is a medium of exchange.

Accepted Answer

A) True 
 B)False

Question 9

M2 is the narrow measure of the money supply.

Accepted Answer

A) True 
 B)False

Question 10

On a bank's balance sheet,the value of its assets must equal:

Accepted Answer

A) net worth only. 
B) liabilities only. 
C) owner's equity. 
D) the value of its liabilities plus net worth. 
E) its revenues minus costs. 
A) net worth only. 
B) liabilities only. 
C) owner's equity. 
D) the value of its liabilities plus net worth. 
E) its revenues minus costs.

If the required reserve ratio is 10 percent and a bank receives a new deposit for $100,000,then the:

One of the main functions of the Fed is minting U.S.coins.

Which of the following measures did the Fed take during the uncertain days following the terrorist attacks of September 11,2001?

Which of the following statements is correct?

If the simple money multiplier is 5,the required reserve ratio must be equal to _____.

The simple money multiplier:

Banks minimize the risk of loss to depositors by:

Currency held by the nonbanking public is a medium of exchange.

M2 is the narrow measure of the money supply.

On a bank's balance sheet,the value of its assets must equal:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

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Exam 14: Banking and the Money Supply

If the required reserve ratio is 10 percent and a bank receives a new deposit for $100,000,then the:

One of the main functions of the Fed is minting U.S.coins.

Which of the following measures did the Fed take during the uncertain days following the terrorist attacks of September 11,2001?

Which of the following statements is correct?

If the simple money multiplier is 5,the required reserve ratio must be equal to _____.

The simple money multiplier:

Banks minimize the risk of loss to depositors by:

Currency held by the nonbanking public is a medium of exchange.

M2 is the narrow measure of the money supply.

On a bank's balance sheet,the value of its assets must equal:

The Art and Science of Economic Analysis

Some Tools of Economic Analysis

Economic Decision Makers

Demand, Supply, and Markets

Introduction to Macroeconomics

Tracking the U S Economy

Unemployment and Inflation

Us Productivity and Growth

Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Monetary Theory and Policy

The Policy Debate: Active or Passive

International Trade

International Finance

Economic Development

Filters