Question 1

Which of the following describes the identity embodied in a balance sheet?

Accepted Answer

A)  Net worth plus assets equal liabilities. 
B)  Assets plus liabilities equal net worth. 
C)  Assets equal liabilities plus net worth. 
D)  Assets plus reserves equal net worth. 
A)  Net worth plus assets equal liabilities. 
B)  Assets plus liabilities equal net worth. 
C)  Assets equal liabilities plus net worth. 
D)  Assets plus reserves equal net worth.

Question 2

If m equals the maximum number of new dollars that can be created for a single dollar of excess reserves and R equals the required reserve ratio, then for the banking system,

Accepted Answer

A)  m = R ? 1. 
B)  $R = m / 1$ 
C)  R = m ? 1. 
D)  $m = 1 / R$ 
A)  m = R ? 1. 
B)  $R = m / 1$ 
C)  R = m ? 1. 
D)  $m = 1 / R$

Question 3

Refer to the accompanying consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 30 percent. All ﬁgures are in billions. The maximum amount by which the commercial banking
System can expand the supply of money by lending is

Accepted Answer

A)  $30 billion. 
B)  $23.1 billion. 
C)  $27 billion. 
D)  $15 billion. 
A)  $30 billion. 
B)  $23.1 billion. 
C)  $27 billion. 
D)  $15 billion.

Question 4

A commercial bank has excess reserves of $10,000 and a required reserve ratio of 20 percent. It grants a loan of $8,000 to a customer, who then writes out a check for $8,000 that is deposited in another bank. The ﬁrst bank will
ﬁnd its reserves decrease by

Accepted Answer

A)  $2,000. 
B)  $3,000. 
C)  $1,600. 
D)  $8,000. 
A)  $2,000. 
B)  $3,000. 
C)  $1,600. 
D)  $8,000.

Question 5

Commercial banks increase the supply of money when they purchase either personal IOUs or government bonds
from businesses and households.

Accepted Answer

A) True 
 B)False

Which of the following describes the identity embodied in a balance sheet?

If m equals the maximum number of new dollars that can be created for a single dollar of excess reserves and R equals the required reserve ratio, then for the banking system,

Refer to the accompanying consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 30 percent. All ﬁgures are in billions. The maximum amount by which the commercial banking System can expand the supply of money by lending is

A commercial bank has excess reserves of $10,000 and a required reserve ratio of 20 percent. It grants a loan of $8,000 to a customer, who then writes out a check for $8,000 that is deposited in another bank. The ﬁrst bank will ﬁnd its reserves decrease by

Commercial banks increase the supply of money when they purchase either personal IOUs or government bonds from businesses and households.

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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Exam 15: Money Creation

Which of the following describes the identity embodied in a balance sheet?

If m equals the maximum number of new dollars that can be created for a single dollar of excess reserves and R equals the required reserve ratio, then for the banking system,

Refer to the accompanying consolidated balance sheet for the commercial banking system. Assume the required reserve ratio is 30 percent. All ﬁgures are in billions. The maximum amount by which the commercial banking System can expand the supply of money by lending is

A commercial bank has excess reserves of $10,000 and a required reserve ratio of 20 percent. It grants a loan of $8,000 to a customer, who then writes out a check for $8,000 that is deposited in another bank. The ﬁrst bank will ﬁnd its reserves decrease by

Commercial banks increase the supply of money when they purchase either personal IOUs or government bonds from businesses and households.

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures Caused by Externalities Asymmetric Information

Public Goods, Public Choice, and Government Failure

An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

Filters