Exam 19: Money Creation

Imagine that Odyssey National is a brand new bank, and that its required reserve ratio is 10 percent. If it accepts a $1,000 deposit, then its loan balance can increase by a maximum of:

When the Federal Reserve sells government bonds to the public, it:

If the Fed decides to use an open market operation to reduce the money supply by $1 million, and if the money multiplier is 10, then what total amount of Treasury securities must the Fed initially sell?

The market in which banks make loans of reserves for terms of over one year is called the federal funds market.

Exhibit 19-3  Balance sheet of Tucker National Bank The required reserve ratio in Exhibit 19-3 is:

Exhibit 19-5  Balance sheet of Tucker National Bank In Exhibit 19-5, the bank could:

If a bank has $100,000 in checkable deposits, reserves of $20,000, and no excess reserves, then the required reserve ratio is:

Which of the following would cause the money supply in the United States to expand?

Exhibit 19-2  Balance Sheet of Springfield National Bank In Exhibit 19-2, if Springfield National has excess reserves equal to $300, and then its customers write checks for $200, its excess reserves will fall to:

The federal funds market is the market in which:

A bank creates money when it:

If your bank receives a checkable deposit of $20,000, and the banking system makes loans totaling $180,000, the maximum possible, then the required reserve ratio must be:

Exhibit 19-1  Balance sheet of First Iliad State Bank In Exhibit 19-1, if the required reserve ratio is raised to 18 percent, then First Iliad State will:

Suppose Brenda accepts a loan of $10,000 and deposits the money in her checking account. If the required reserve ratio is 10 percent, and if banks loan out all of their reserves, then what is the maximum increase in the money supply after the multiplier effect has fully operated?

If the fractional reserve system did not exist,

Banks normally hold few excess reserves because this practice is:

Reserves of member banks appear on the Fed's balance sheet as liabilities.

Assume that Paris First National Bank is a thriving bank with deposits of $20 million. If the required reserve ratio is 20 percent and the bank is fully loaned out, the bank will keep what amount of required reserves?

If total deposits at Last Bank and Trust are $100 million, total loans are $70 million, and excess reserves are $20 million, then which of the following is the required reserve ratio?

Which of the following correctly is the money multiplier?