Exam 34: Money Creation

An individual bank can safely lend out a multiple of its excess reserves,but the banking system can safely lend out only an amount equal to the excess reserves in the banking system.

When commercial banks retire outstanding loans,the supply of money is increased.

Which of the following are all assets to a commercial bank?

Other things equal,if the required reserve ratio was lowered:

Commercial banks monetize claims when they:

The term "leverage" refers to:

Most modern banking systems are based on:

If the reserve ratio is 15 percent and commercial bankers decide to hold additional excess reserves equal to 5 percent of any newly acquired checkable deposits,then the relevant monetary multiplier for the banking system will be:

Excess reserves are the amount by which required reserves exceed actual reserves.

Which of the following is correct?

If we both have checking accounts in the same commercial bank and I write a check in your favor for $200,the bank's:

Answer the question on the basis of the following information about a banking system: new currency deposited in the system = $40 billion;legal reserve ratio = 0.20;excess reserves prior to the currency deposit = $0. Refer to the information.With the $40 billion deposit,the banking system will be able to expand the money supply through loans by:

Suppose the reserve requirement is 10 percent.If a bank has $5 million of checkable deposits and actual reserves of $500,000,the bank:

A commercial bank can expand its excess reserves by:

Answer the question on the basis of the following balance sheet for the First National Bank of Bunco.All figures are in millions. Reserves Securities Loans Property \ 20 25 15 90 Checkable Deposits Stock Shares \1 00 50 Refer to the data.If this bank has excess reserves of $6 million,the legal reserve ratio must be:

A bank temporarily short of required reserves may be able to remedy this situation by:

Excess reserves refer to the:

If D equals the maximum amount of new demand-deposit money that can be created by the banking system on the basis of any given amount of excess reserves;E equals the amount of excess reserves;and m is the monetary multiplier,then:

Commercial banks monetize claims when they sell securities to Federal Reserve Banks.

Answer the question on the basis of the following consolidated balance sheet for the commercial banking system.Assume the required reserve ratio is 30 percent.All figures are in billions. Reserves Securities Loans Property \ 51 109 100 10 Checkable Deposits Stock Shares \1 40 130 Refer to the data.If the commercial banking system actually loans the maximum amount it is able to lend: