Question 1

When all banks have zero excess reserves to start and you write a cheque that is deposited in another bank,it is true that

Accepted Answer

A) the system will still have the same amount of reserves. 
B) the system will have increased its reserves. 
C) the system will have decreased its reserves. 
D) two banks will now have positive excess reserves. 
A) the system will still have the same amount of reserves. 
B) the system will have increased its reserves. 
C) the system will have decreased its reserves. 
D) two banks will now have positive excess reserves.

Question 2

If the desired reserve ratio is 10 percent,the money multiplier is

Accepted Answer

A) 10 percent. 
B) 10. 
C) 100. 
D) 1) 
A) 10 percent. 
B) 10. 
C) 100. 
D) 1)

Question 3

The required ratio is 10 percent of their deposits as reserves.Currently,there are $200 billion in deposits.The Bank of Canada raises the reserve requirement to 20 percent.Consequently,

Accepted Answer

A) the money supply remains unchanged,but there are now no excess reserves. 
B) the money supply falls by $100 billion. 
C) the money supply falls by $200 billion. 
D) the money supply falls by $400 billion. 
A) the money supply remains unchanged,but there are now no excess reserves. 
B) the money supply falls by $100 billion. 
C) the money supply falls by $200 billion. 
D) the money supply falls by $400 billion.

Question 4

If the desired reserve requirement is raised,the money multiplier

Accepted Answer

A) is lowered. 
B) is increased. 
C) stays the same. 
D) is doubled. 
A) is lowered. 
B) is increased. 
C) stays the same. 
D) is doubled.

Question 5

Table 13-4
  
-In Table 13-4,the Bank of Wealth is subject to a desired reserve ratio of

Accepted Answer

A) 20 percent. 
B) 15 percent. 
C) 10 percent. 
D) 5 percent. 
A) 20 percent. 
B) 15 percent. 
C) 10 percent. 
D) 5 percent.

Question 6

Table 13-4
  
-In Table 13-4,the Bank of Wealth could

Accepted Answer

A) use its excess reserves to make more loans or buy government securities. 
B) use its excess reserves to decrease its liabilities. 
C) use all reserves to make more loans or buy government securities. 
D) not change its assets portfolio. 
A) use its excess reserves to make more loans or buy government securities. 
B) use its excess reserves to decrease its liabilities. 
C) use all reserves to make more loans or buy government securities. 
D) not change its assets portfolio.

Question 7

Under a system of fractional reserve banking,the desired reserve ratio is the ratio of

Accepted Answer

A) assets to net worth. 
B) desired reserves to total chequable deposits. 
C) desired reserves to net worth. 
D) excess reserves to desired reserves. 
A) assets to net worth. 
B) desired reserves to total chequable deposits. 
C) desired reserves to net worth. 
D) excess reserves to desired reserves.

Question 8

The required reserve ratio is 20 percent.All banks have zero excess reserves.A check for $1 million is deposited in Bank A,written on an account from Bank B.What are the new excess reserves at Bank A,and by how much does the money supply change if all banks make loans so that they have zero excess reserves?

Accepted Answer

A) $200,000;$800,000 
B) $800,000;$1 million 
C) $800,000;$800,000 
D) $800,000;0 
A) $200,000;$800,000 
B) $800,000;$1 million 
C) $800,000;$800,000 
D) $800,000;0

Question 9

As far as reserves and deposits are concerned,describe the assets and liabilities of a bank.

Accepted Answer

The major liabilities of a bank are the

Question 10

A bank with $200 million in deposits keeps $20 million of cash in the bank vault,$10 million in deposits at the Bank of Canada,and $5 million in government securities in the bank vault.Its actual reserves equal

Accepted Answer

A) $10 million. 
B) $20 million. 
C) $30 million. 
D) $35 million. 
A) $10 million. 
B) $20 million. 
C) $30 million. 
D) $35 million.

Question 11

What are the maximum and minimum values the deposit multiplier can potentially take on.

Accepted Answer

The minimum:
If the desired reserve rati

Question 12

If a bank holds $20,000 in desired reserves in order to meet a desired reserve ratio of 40 percent,demand deposits must equal

Accepted Answer

A) $20,000. 
B) $40,000. 
C) $50,000. 
D) $100,000. 
A) $20,000. 
B) $40,000. 
C) $50,000. 
D) $100,000.

Question 13

A bank currently has $100 million in deposits,$6 million in cash in the vault,deposits with the Bank of Canada of $4 million,and other assets equal to $90 million.The desired reserve ratio is 10 percent.A new deposit is made of $1 million.What is the maximum sized loan the bank can now make?

Accepted Answer

A) $1.8 million 
B) $1 million 
C) $900,000 
D) 0 
A) $1.8 million 
B) $1 million 
C) $900,000 
D) 0

Question 14

Provide a brief discussion and exposition on the money multiplier;how it works,what its effects are and what the consequences of leakages are on creation of deposits.

Accepted Answer

1.A description of the money multiplier

Question 15

A bank with $500 million in deposits holds $35 million in vault cash,has $40 million on deposit with the Bank of Canada,and owns $50 million in government securities.If a fall in the desired reserve ratio generates excess reserves of $25 million,and prior to the fall the bank had no excess reserves,then the former desired reserve ratio was ________ and the new desired reserve ratio is ________.

Accepted Answer

A) 15 percent;10 percent 
B) 20 percent;15 percent 
C) 20 percent;10 percent 
D) 14 percent;10 percent 
A) 15 percent;10 percent 
B) 20 percent;15 percent 
C) 20 percent;10 percent 
D) 14 percent;10 percent

When all banks have zero excess reserves to start and you write a cheque that is deposited in another bank,it is true that

If the desired reserve ratio is 10 percent,the money multiplier is

The required ratio is 10 percent of their deposits as reserves.Currently,there are $200 billion in deposits.The Bank of Canada raises the reserve requirement to 20 percent.Consequently,

If the desired reserve requirement is raised,the money multiplier

Table 13-4 -In Table 13-4,the Bank of Wealth is subject to a desired reserve ratio of

Table 13-4 -In Table 13-4,the Bank of Wealth could

Under a system of fractional reserve banking,the desired reserve ratio is the ratio of

As far as reserves and deposits are concerned,describe the assets and liabilities of a bank.

A bank with $200 million in deposits keeps $20 million of cash in the bank vault,$10 million in deposits at the Bank of Canada,and $5 million in government securities in the bank vault.Its actual reserves equal

What are the maximum and minimum values the deposit multiplier can potentially take on.

If a bank holds $20,000 in desired reserves in order to meet a desired reserve ratio of 40 percent,demand deposits must equal

A bank currently has $100 million in deposits,$6 million in cash in the vault,deposits with the Bank of Canada of $4 million,and other assets equal to $90 million.The desired reserve ratio is 10 percent.A new deposit is made of $1 million.What is the maximum sized loan the bank can now make?

Provide a brief discussion and exposition on the money multiplier;how it works,what its effects are and what the consequences of leakages are on creation of deposits.

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 13: Money Creation and Deposit Insurance

When all banks have zero excess reserves to start and you write a cheque that is deposited in another bank,it is true that

If the desired reserve ratio is 10 percent,the money multiplier is

The required ratio is 10 percent of their deposits as reserves.Currently,there are $200 billion in deposits.The Bank of Canada raises the reserve requirement to 20 percent.Consequently,

If the desired reserve requirement is raised,the money multiplier

Table 13-4 -In Table 13-4,the Bank of Wealth is subject to a desired reserve ratio of

Table 13-4 -In Table 13-4,the Bank of Wealth could

Under a system of fractional reserve banking,the desired reserve ratio is the ratio of

As far as reserves and deposits are concerned,describe the assets and liabilities of a bank.

A bank with $200 million in deposits keeps $20 million of cash in the bank vault,$10 million in deposits at the Bank of Canada,and $5 million in government securities in the bank vault.Its actual reserves equal

What are the maximum and minimum values the deposit multiplier can potentially take on.

If a bank holds $20,000 in desired reserves in order to meet a desired reserve ratio of 40 percent,demand deposits must equal

A bank currently has $100 million in deposits,$6 million in cash in the vault,deposits with the Bank of Canada of $4 million,and other assets equal to $90 million.The desired reserve ratio is 10 percent.A new deposit is made of $1 million.What is the maximum sized loan the bank can now make?

Provide a brief discussion and exposition on the money multiplier;how it works,what its effects are and what the consequences of leakages are on creation of deposits.

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Measuring the Economys Performance

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters