Use the following balance sheet for the ABC National Bank in answering the question.Assume the required reserve ratio is 20 percent. $\begin{array}{c} \begin{array}{lll} \quad\quad\quad\underline{\text { Assets}}\\ \text { Reserves}\\ \text { Securities}\\ \text { Loans}\\ \text { Property} \end{array} \begin{array}{l} \\ \$ 27,000 \\ 50,000 \\ 33,000 \\ 200,000 \end{array} \begin{array}{lll} \quad\quad \underline{\text { Liabilities \& Net Worth }}\\ \text { Checkable Deposits}\\ \text { Stock Shares}\\ \\ \\ \end{array} \begin{array}{lll} \\ \$1,100\\ 200,000\\ \\ \\ \end{array} \end{array}$ Refer to the data.Assuming the bank loans out all of its remaining excess reserves as a checkable deposit,and has a check cleared against it for that amount,its reserves and checkable deposits will now be:

A) $25,000 and $122,000 respectively. B) $22,000 and $110,000 respectively. C) $32,000 and $115,000 respectively. D) $22,000 and $105,000 respectively. A) $25,000 and $122,000 respectively. B) $22,000 and $110,000 respectively. C) $32,000 and $115,000 respectively. D) $22,000 and $105,000 respectively.

Answer the question on the basis of the following table for a commercial bank or thrift: $\begin{array}{c} \begin{array}{c} (1)\\ \text {Legal Reserve}\\ \underline{\text {Ratio (\%)}}\\ 10 \\ 20 \\ 25 \\ 30 \end{array} \begin{array}{c} (2)\\ \text {Checkable}\\ \underline{\text {Deposits}}\\ \$ 40,000 \\ 40,000\\ 40,000\\ 40,000 \end{array} \begin{array}{c} (3)\\ \text {Actual}\\ \underline{\text {Reserves}}\\ \$ 10,000 \\ 10,000\\ 10,000\\ 10,000 \end{array} \end{array}$ Refer to the table.When the legal reserve ratio is 30 percent,the monetary multiplier is:

A) 5. B) 4. C) 3.33. D) 2.5. A) 5. B) 4. C) 3.33. D) 2.5.

Assume the Continental National Bank's balance statement is as follows: $\begin{array}{c} \begin{array}{lll} \quad\quad\quad\underline{\text { Assets}}\\ \text { Reserves}\\ \text { Loans}\\ \text { Securities} \end{array} \begin{array}{l} \\ \$ 40,000 \\ 25,000 \\ 110,000 \\ \end{array} \begin{array}{lll} \quad\quad \underline{\text { Liabilities \& Net Worth }}\\ \text { Checkable Deposits}\\ \text { Stock Shares}\\ \\ \end{array} \begin{array}{lll} \\ \$130,000\\ 45,000\\ \\ \end{array} \end{array}$ Assuming a legal reserve ratio of 20 percent,how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?

A) $3,000. B) $24,000. C) $6,000. D) $16,000. A) $3,000. B) $24,000. C) $6,000. D) $16,000.

Use the following balance sheet for the ABC National Bank in answering the question.Assume the required reserve ratio is 20 percent. $\begin{array}{c} \begin{array}{lll} \quad\quad\quad\underline{\text { Assets}}\\ \text { Reserves}\\ \text { Securities}\\ \text { Loans}\\ \text { Property} \end{array} \begin{array}{l} \\ \$ 27,000 \\ 50,000 \\ 33,000 \\ 200,000 \end{array} \begin{array}{lll} \quad\quad \underline{\text { Liabilities \& Net Worth }}\\ \text { Checkable Deposits}\\ \text { Stock Shares}\\ \\ \\ \end{array} \begin{array}{lll} \\ \$1,100\\ 200,000\\ \\ \\ \end{array} \end{array}$ Refer to the data.This commercial bank has excess reserves of:

A) $0. B) $3,000. C) $12,000. D) $5,000. A) $0. B) $3,000. C) $12,000. D) $5,000.

Exam 34: Money Creation

Suppose a commercial banking system has $100,000 of outstanding checkable deposits and actual reserves of $35,000.If the reserve ratio is 20 percent,the banking system can expand the supply of money by the maximum amount of:

(Multiple Choice)

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Question 101

Assume that a bank initially has no excess reserves.If it receives $5,000 in cash from a depositor and the bank finds that it can safely lend out $4,500,the reserve requirement must be:

(Multiple Choice)

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Question 102

Money is destroyed when:

(Multiple Choice)

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Question 103

Which of the following statements is correct?

(Multiple Choice)

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Question 104

If actual reserves in the banking system are $40,000,excess reserves are $10,000,and checkable deposits are $240,000,then the legal reserve requirement is:

(Multiple Choice)

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Question 105

Checkable deposits are a liability on a bank's balance sheet.

(True/False)

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Question 106

In prosperous times,commercial banks are likely to hold very small amounts of excess reserves because:

(Multiple Choice)

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Question 107

Suppose Balin has $100 to invest in an opportunity that returns,for every $100 invested,$120 if it goes well but only $80 if it goes poorly.If leverage allows Balin to borrow $90 for every $10 he invests,what are his rates of profit and loss,respectively,if he borrows the full amount to invest in the opportunity?

(Multiple Choice)

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Question 108

Commercial bank reserves are an asset to commercial banks but a liability to the Federal Reserve Bank holding them.

(True/False)

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Question 109

The market for immediately available reserve balances at the Federal Reserve is known as the:

(Multiple Choice)

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Question 110

If actual reserves in the banking system are $50,000,excess reserves are $5,000,and checkable deposits are $225,000,then the monetary multiplier is:

(Multiple Choice)

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Question 111

Use the following balance sheet for the ABC National Bank in answering the question.Assume the required reserve ratio is 20 percent. Reserves Securities Loans Property \ 27,000 50,000 33,000 200,000 Checkable Deposits Stock Shares \1 ,100 200,000 Refer to the data.Assuming the bank loans out all of its remaining excess reserves as a checkable deposit,and has a check cleared against it for that amount,its reserves and checkable deposits will now be:

(Multiple Choice)

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Question 112

Answer the question on the basis of the following table for a commercial bank or thrift: Refer to row 1 in the table.The number appropriate for space W is:

(Multiple Choice)

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Question 113

The amount of reserves that a commercial bank is required to hold is equal to:

(Multiple Choice)

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Question 114

A fractional reserve banking system:

(Multiple Choice)

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Question 115

Answer the question on the basis of the following table for a commercial bank or thrift: (1) Legal Reserve 10 20 25 30 (2) Checkable \ 40,000 40,000 40,000 40,000 (3) Actual \ 10,000 10,000 10,000 10,000 Refer to the table.When the legal reserve ratio is 30 percent,the monetary multiplier is:

(Multiple Choice)

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Question 116

If the monetary authorities want to reduce the monetary multiplier,they should:

(Multiple Choice)

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Question 117

If a portion of the loans extended by commercial banks is taken as cash rather than as checkable deposits,the maximum money-creating potential of the commercial banking system will:

(Multiple Choice)

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Question 118

Assume the Continental National Bank's balance statement is as follows: Reserves Loans Securities \ 40,000 25,000 110,000 Checkable Deposits Stock Shares \1 30,000 45,000 Assuming a legal reserve ratio of 20 percent,how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?

(Multiple Choice)

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Question 119

Use the following balance sheet for the ABC National Bank in answering the question.Assume the required reserve ratio is 20 percent. Reserves Securities Loans Property \ 27,000 50,000 33,000 200,000 Checkable Deposits Stock Shares \1 ,100 200,000 Refer to the data.This commercial bank has excess reserves of:

(Multiple Choice)

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Question 120

Suppose a commercial banking system has $100,000 of outstanding checkable deposits and actual reserves of $35,000.If the reserve ratio is 20 percent,the banking system can expand the supply of money by the maximum amount of:

Assume that a bank initially has no excess reserves.If it receives $5,000 in cash from a depositor and the bank finds that it can safely lend out $4,500,the reserve requirement must be:

Money is destroyed when:

Which of the following statements is correct?

If actual reserves in the banking system are $40,000,excess reserves are $10,000,and checkable deposits are $240,000,then the legal reserve requirement is:

Checkable deposits are a liability on a bank's balance sheet.

In prosperous times,commercial banks are likely to hold very small amounts of excess reserves because:

Commercial bank reserves are an asset to commercial banks but a liability to the Federal Reserve Bank holding them.

The market for immediately available reserve balances at the Federal Reserve is known as the:

If actual reserves in the banking system are $50,000,excess reserves are $5,000,and checkable deposits are $225,000,then the monetary multiplier is:

Answer the question on the basis of the following table for a commercial bank or thrift: Refer to row 1 in the table.The number appropriate for space W is:

The amount of reserves that a commercial bank is required to hold is equal to:

A fractional reserve banking system:

Answer the question on the basis of the following table for a commercial bank or thrift: (1) Legal Reserve 10 20 25 30 (2) Checkable \ 40,000 40,000 40,000 40,000 (3) Actual \ 10,000 10,000 10,000 10,000 Refer to the table.When the legal reserve ratio is 30 percent,the monetary multiplier is:

If the monetary authorities want to reduce the monetary multiplier,they should:

If a portion of the loans extended by commercial banks is taken as cash rather than as checkable deposits,the maximum money-creating potential of the commercial banking system will:

Income Inequality Poverty and Discrimination

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An Introduction to Macroeconomics

Measuring Domestic Output and National Income

Economic Growth

Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

The Aggregate Expenditures Model

Aggregate Demand and Aggregate Supply

The Balance of Payments, Exchange Rates, and Trade Deficits

Money, Banking, and Financial Institutions

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

International Trade

The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

The United States and the Global Economy

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