Question 1

Suppose Bank X is holding total cash reserves of $32,000 on deposits of $90,000. If the reserve requirement is 15 percent, then the excess reserves held by this bank is:

Accepted Answer

A)  $27,200. 
B)  $58,000. 
C)  $4,800. 
D)  $13,200. 
E)  $18,500. 
A)  $27,200. 
B)  $58,000. 
C)  $4,800. 
D)  $13,200. 
E)  $18,500.

Question 2

The Gramm-Leach-Bliley Act (GLBA), passed by the U.S. Congress in the year 1999, allows commercial banks to:

Accepted Answer

A)  operate in all foreign countries. 
B)  open new branches in Cuba. 
C)  expand their business into other areas of finance, including insurance and selling securities. 
D)  raise reserve requirements for other financial institutions. 
E)  eliminate unit banking. 
A)  operate in all foreign countries. 
B)  open new branches in Cuba. 
C)  expand their business into other areas of finance, including insurance and selling securities. 
D)  raise reserve requirements for other financial institutions. 
E)  eliminate unit banking.

Question 3

The maximum money that can be created by the entire banking system is equal to a multiple of its excess reserves.

Accepted Answer

A) True 
 B)False

Question 4

The M2 measure of money supply includes all of the following, except:

Accepted Answer

A)  demand deposits. 
B)  U.S. government securities. 
C)  savings deposits. 
D)  money market deposits. 
E)  certificates of deposit. 
A)  demand deposits. 
B)  U.S. government securities. 
C)  savings deposits. 
D)  money market deposits. 
E)  certificates of deposit.

Question 5

Which of the following is a transactions account?

Accepted Answer

A)  Currency 
B)  Travelers' checks 
C)  A savings account 
D)  A credit card balance 
E)  A demand deposit 
A)  Currency 
B)  Travelers' checks 
C)  A savings account 
D)  A credit card balance 
E)  A demand deposit

Question 6

A scalper reselling Super Bowl tickets is an example of money being used as:

Accepted Answer

A)  a store of value. 
B)  a unit of account. 
C)  an illegal asset. 
D)  a standard of deferred payment. 
E)  a medium of exchange. 
A)  a store of value. 
B)  a unit of account. 
C)  an illegal asset. 
D)  a standard of deferred payment. 
E)  a medium of exchange.

Question 7

The table given below records the amount of new deposits, the value of required reserves, and total amount loaned out by Banks 1, 2, and 3.
Table 12.3
 $\begin{array}{l}
\begin{array}{|c|c|c|c|}
\hline \text { Bank } & \text { New Deposit } & \begin{array}{c}
\text { Required } \
\text { Reserves }
\end{array} & \text { Loans } \
\hline \text { Bank 1 } & \$ 10,000 & \$ 1,000 & \$ 9,000 \
\hline \text { Bank 2 } & \$ 9,000 & \$ 900 & \$ 8,100 \
\hline \text { Bank 3 } & \$ 8,100 & \$ 810 & \$ 7,290 \
\hline
\end{array}\
\text { *Assume all excess reserves are loaned out. }
\end{array}$
-Refer to Table 12.3. If the reserve requirement changed to 8 percent, then total deposits in the economy would be equal to:

Accepted Answer

A)  $125,000. 
B)  $160,000. 
C)  $77,500. 
D)  $80,000. 
E)  $75,000. 
A)  $125,000. 
B)  $160,000. 
C)  $77,500. 
D)  $80,000. 
E)  $75,000.

Question 8

The table given below records the amount of new deposits, the value of required reserves, and total amount loaned out by Banks 1, 2, and 3.
Table 12.3
 $\begin{array}{l}
\begin{array}{|c|c|c|c|}
\hline \text { Bank } & \text { New Deposit } & \begin{array}{c}
\text { Required } \
\text { Reserves }
\end{array} & \text { Loans } \
\hline \text { Bank 1 } & \$ 10,000 & \$ 1,000 & \$ 9,000 \
\hline \text { Bank 2 } & \$ 9,000 & \$ 900 & \$ 8,100 \
\hline \text { Bank 3 } & \$ 8,100 & \$ 810 & \$ 7,290 \
\hline
\end{array}\
\text { *Assume all excess reserves are loaned out. }
\end{array}$
-Refer to Table 12.3. If the reserve requirement changed to 8 percent, then total loans in the economy would be equal to _____.

Accepted Answer

A)  $170,000 
B)  $115,000 
C)  $70,000 
D)  $90,000 
E)  $150,000 
A)  $170,000 
B)  $115,000 
C)  $70,000 
D)  $90,000 
E)  $150,000

Question 9

The maximum amount by which the entire banking system can create money is equal to:

Accepted Answer

A)  a fraction of its excess reserves. 
B)  a fraction of its required reserves. 
C)  a multiple of its total reserves. 
D)  a multiple of its excess reserves. 
E)  its excess reserves. 
A)  a fraction of its excess reserves. 
B)  a fraction of its required reserves. 
C)  a multiple of its total reserves. 
D)  a multiple of its excess reserves. 
E)  its excess reserves.

Question 10

Commodity money is money that:

Accepted Answer

A)  has no value as a commodity. 
B)  is not backed by gold or silver and is not a legal tender. 
C)  may go out of circulation with an increase in its intrinsic value. 
D)  always has a face value greater than the intrinsic value. 
E)  is solely used in barter exchanges. 
A)  has no value as a commodity. 
B)  is not backed by gold or silver and is not a legal tender. 
C)  may go out of circulation with an increase in its intrinsic value. 
D)  always has a face value greater than the intrinsic value. 
E)  is solely used in barter exchanges.

Question 11

The balance sheet of a depository institution lists:

Accepted Answer

A)  loans to private individuals as assets. 
B)  excess reserves as liabilities. 
C)  checkable deposits as liabilities. 
D)  required reserves as liabilities. 
E)  loans from the central bank as assets. 
A)  loans to private individuals as assets. 
B)  excess reserves as liabilities. 
C)  checkable deposits as liabilities. 
D)  required reserves as liabilities. 
E)  loans from the central bank as assets.

Question 12

The available credit limit we have in a credit card reflects the amount of money we hold in our savings account.

Accepted Answer

A) True 
 B)False

Question 13

Suppose the National Bank has total cash reserves of $2,000 and has $5,000 in total deposits. If its total excess reserves are $1,250, then the reserve requirement is equal to:

Accepted Answer

A)  25 percent. 
B)  15 percent. 
C)  10 percent. 
D)  5 percent. 
E)  20 percent. 
A)  25 percent. 
B)  15 percent. 
C)  10 percent. 
D)  5 percent. 
E)  20 percent.

Question 14

Outstanding U.S. dollar-denominated travelers' checks issued by non-bank institutions are not counted as part of the M1 money supply.

Accepted Answer

A) True 
 B)False

Question 15

Credit can be described as:

Accepted Answer

A)  money used as a standard of deferred payment. 
B)  savings made available to borrowers. 
C)  fiduciary currency. 
D)  a form of liquid asset. 
E)  bank loans converted into commodity money. 
A)  money used as a standard of deferred payment. 
B)  savings made available to borrowers. 
C)  fiduciary currency. 
D)  a form of liquid asset. 
E)  bank loans converted into commodity money.

Question 16

As a standard of deferred payment, money can be used to:

Accepted Answer

A)  express debt obligations in the form of purchasing power. 
B)  foster barter activity. 
C)  facilitate exchanges of goods and services. 
D)  achieve a common denominator for measuring the value of goods and services. 
E)  ascertain the liquidity of financial assets. 
A)  express debt obligations in the form of purchasing power. 
B)  foster barter activity. 
C)  facilitate exchanges of goods and services. 
D)  achieve a common denominator for measuring the value of goods and services. 
E)  ascertain the liquidity of financial assets.

Question 17

People in developing countries may want to participate in a rotating savings and credit association (ROSCAS) because:

Accepted Answer

A)  such associations are part of the black market and they offer attractive returns. 
B)  such associations promise a guaranteed return unlike other banking institutions. 
C)  such associations allow participating individuals to invest their savings abroad. 
D)  such associations allow every member but the last to receive funds faster than they could save on their own. 
E)  most governments encourage it. 
A)  such associations are part of the black market and they offer attractive returns. 
B)  such associations promise a guaranteed return unlike other banking institutions. 
C)  such associations allow participating individuals to invest their savings abroad. 
D)  such associations allow every member but the last to receive funds faster than they could save on their own. 
E)  most governments encourage it.

Question 18

Sales contracts between developed countries are usually written (invoiced) in the national currency of the exporter.

Accepted Answer

A) True 
 B)False

Question 19

When do we say that a bank is loaned up?

Accepted Answer

A)  When its debtors don't want to repay 
B)  When it is susceptible to a bank panic 
C)  When its excess reserves equal zero 
D)  When it is part of a fractional reserve banking system 
E)  When its required reserves are equal to its excess reserves 
A)  When its debtors don't want to repay 
B)  When it is susceptible to a bank panic 
C)  When its excess reserves equal zero 
D)  When it is part of a fractional reserve banking system 
E)  When its required reserves are equal to its excess reserves

Question 20

Assume that the reserve requirement is 10 percent. If a bank has total deposits of $80 million, then the required reserves must equal:

Accepted Answer

A)  $80 million. 
B)  $12 million. 
C)  $50 million. 
D)  $8 million. 
E)  $10 million. 
A)  $80 million. 
B)  $12 million. 
C)  $50 million. 
D)  $8 million. 
E)  $10 million.

Suppose Bank X is holding total cash reserves of $32,000 on deposits of $90,000. If the reserve requirement is 15 percent, then the excess reserves held by this bank is:

The Gramm-Leach-Bliley Act (GLBA), passed by the U.S. Congress in the year 1999, allows commercial banks to:

The maximum money that can be created by the entire banking system is equal to a multiple of its excess reserves.

The M2 measure of money supply includes all of the following, except:

Which of the following is a transactions account?

A scalper reselling Super Bowl tickets is an example of money being used as:

The maximum amount by which the entire banking system can create money is equal to:

Commodity money is money that:

The balance sheet of a depository institution lists:

The available credit limit we have in a credit card reflects the amount of money we hold in our savings account.

Suppose the National Bank has total cash reserves of $2,000 and has $5,000 in total deposits. If its total excess reserves are $1,250, then the reserve requirement is equal to:

Outstanding U.S. dollar-denominated travelers' checks issued by non-bank institutions are not counted as part of the M1 money supply.

Credit can be described as:

As a standard of deferred payment, money can be used to:

People in developing countries may want to participate in a rotating savings and credit association (ROSCAS) because:

Sales contracts between developed countries are usually written (invoiced) in the national currency of the exporter.

When do we say that a bank is loaned up?

Assume that the reserve requirement is 10 percent. If a bank has total deposits of $80 million, then the required reserves must equal:

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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Exam 12: Money and Banking

Suppose Bank X is holding total cash reserves of $32,000 on deposits of $90,000. If the reserve requirement is 15 percent, then the excess reserves held by this bank is:

The Gramm-Leach-Bliley Act (GLBA), passed by the U.S. Congress in the year 1999, allows commercial banks to:

The maximum money that can be created by the entire banking system is equal to a multiple of its excess reserves.

The M2 measure of money supply includes all of the following, except:

Which of the following is a transactions account?

A scalper reselling Super Bowl tickets is an example of money being used as:

The maximum amount by which the entire banking system can create money is equal to:

Commodity money is money that:

The balance sheet of a depository institution lists:

The available credit limit we have in a credit card reflects the amount of money we hold in our savings account.

Suppose the National Bank has total cash reserves of $2,000 and has $5,000 in total deposits. If its total excess reserves are $1,250, then the reserve requirement is equal to:

Outstanding U.S. dollar-denominated travelers' checks issued by non-bank institutions are not counted as part of the M1 money supply.

Credit can be described as:

As a standard of deferred payment, money can be used to:

People in developing countries may want to participate in a rotating savings and credit association (ROSCAS) because:

Sales contracts between developed countries are usually written (invoiced) in the national currency of the exporter.

When do we say that a bank is loaned up?

Assume that the reserve requirement is 10 percent. If a bank has total deposits of $80 million, then the required reserves must equal:

Economics: the World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

National Income Accounting

An Introduction to the Foreign Exchange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters