Exam 13: Money and Banks

If you deposit $1,000 in your checking account,your bank is only required to hold a portion of the deposit and is allowed to lend out the balance.This illustrates the concept known as:

Banks do all of the following except:

Money functions well as a store of value when prices are rising.

Which of the following is an essential function performed by banks?

The essential characteristics of money are that it serves as a medium of exchange,a store of value,and a standard of value.

Which of the following is a direct result of a fractional reserve banking system?

For a single bank in a large banking system,excess reserves are equal to the:

Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system. Table 13.2-Bank of the Universe Balance Sheet -Refer to Table 13.2.With a required reserve ratio of 12 percent,Bank of the Universe would have excess reserves of:

Deposit creation is constrained by the willingness of consumers and businesses to use and accept checks rather than cash for market transactions.