Exam 15: Money, Banking, and Central Banking

Which of the following is the most liquid?

If a $1 million open market purchase by the Fed generates a new deposit at a bank that immediately causes the bank's reserves held at the Fed to increase by $1 million, then the T-account effects are that the bank's assets and liabilities ________ by $1 million and that the Fed's assets and liabilities ________ by $1 million.

From an accounting point of view, a checking account should be considered part of a bank's

When the Fed buys U.S. government securities on the open market,

Suppose that the Fed purchases $1,000,000 worth of bonds and that the reserve ratio is 25 percent. Then, the maximum potential expansion of deposits is

The Federal Reserve System was established in which year?

Which of the following statements does NOT describe a function of money?

To the extent that the value of money is less predictable, it becomes

The Board of Governors of the Federal Reserve System has how many governors?

Let us suppose that you apply for a loan with a bank. You tell the bank that you are going to remodel your kitchen, but after you get the loan you go to Las Vegas to gamble with the money. Your behavior is an example of

An interest-earning account that can be withdrawn at any time without payment of a penalty is a

The larger is the reserve ratio,

The primary purpose of the FDIC is to reduce the potential for

Which of the following assets are counted in M1?

A system in which depository institutions hold reserves that are less than the amount of total deposits is called

Which of the following would reduce the money multiplier?

The Fed is said to be the "lender of last resort" in that

Jane has just deposited $2,000 in her checking account. She knows that the bank will keep part of these funds on hand and loan out the rest. This is an example of

Which of the following is NOT a reason that people tend to deposit their funds with banks rather than lend their funds directly to other individuals?

An account issued by banks yielding a market rate of interest with a minimum balance requirement and a limit on transactions is a