Exam 19: Money Creation

Exhibit 19-2 Balance Sheet of Springfield National Bank -In Exhibit 19-2,if Springfield National finds that it has excess reserves of $300,then the required reserve ratio must be:

Which of the following is a valid statement?

Which of the following directs open market operations?

The rate of interest charged by the Federal Reserve to member banks for reserves borrowed from the Fed is known as the:

Assume the Fed purchases a government security from a private dealer and pays with a Fed check of $100,000.If this check is deposited by the dealer in a bank with a 10 percent required reserve ratio,the bank can extend new loans in the amount of:

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

Assume we have a simplified banking system in balance-sheet equilibrium.Also assume that all banks are subject to a uniform 10 percent reserve requirement and demand deposits are the only form of money.A commercial bank receiving a new demand deposit of $100 would be able to extend new loans in the amount of:

Best National Bank is subject to a 20 percent required reserve ratio.If this bank received a new checkable deposit of $1,000,it could make new loans of:

European banks began with which of the following?

A bank has $100 million of checkable deposits,$6 million of required reserves,and $2 million of excess reserves.What is the required reserve ratio?

Excess reserves equal total reserves plus required reserves.

Suppose the Fed purchases $100 million of U.S.securities from security dealers.If the reserve requirement is 20 percent,the currency holdings of the public are unchanged,and banks have zero excess reserves both before and after the transaction,the total impact on the money supply will be a:

Which of the following compose the reserves of a commercial bank?

Which of the following appears on the liability side of the Fed's balance sheet?

Which of the following policy actions by the Fed would cause the money supply to decrease?

A bank that has $10,000 in excess reserves can extend new loans up to a maximum of:

Which of the following policy actions by the Fed would cause the money supply to increase?

Exhibit 19-6 Balance sheet of Tucker National Bank -Suppose Connie Rich deposits $100,000 into her checking account in the bank shown in Exhibit 19-6.The result would be a:

If banks are fully loaned up,have no excess reserves,and the required reserve ratio is raised,the amount that banks can lend is:

The total lag for fiscal policy tends to be shorter than the total lag for monetary policy.