Exam 15: Monetary Institutions

Calculate M1 and M2 using details from the table given below. Currency Value (in millions) Checkable deposits 75 Traveler's checks 25 Savings deposits 10 Small-denamination time deposits 125 Noninstitutional money market mutual fund shares 75 Maney market deposit accaunts 50

Balance Sheet 15-A A bank's assets consist of $500,000 in total reserves, $1,600,000 in loans, and a building worth $1,200,000. Its liabilities and capital consist of $2,000,000 in demand deposits and $1,300,000 in capital. -Refer to Balance Sheet 15-A.If the required reserve ratio is 30 percent, what is the level of the bank's excess reserves? How much money could the excess reserves be used to create in the banking system as a result?

A reserve requirement of 10% implies a money multiplier of 10 and a reserve requirement of 15% implies a money multiplier of 15.

When is a particular bank in a position to make new loans?

New loans create money directly, but they also create excess reserves in other banks, which leads to still further increases in both loans and the supply of money.

If banks faced a 100 percent reserve requirement, a decrease in banking reserves of $4 million would:

Suppose you found $2,000 hidden in your mattress and deposited it in a demand deposit account at your bank.If the reserve requirement was 25 percent, the deposit would directly create ____ in excess reserves and ultimately lead to a ____ total increase in the money supply, if all banks in the system lend out 100 percent of their excess reserves.

Which of the following is not one of the functions of money?

How could the rumor of a bank failure actually turn into a bank failing? Is the bank really without assets?

With the invention of banking, one important aspect of money was that:

Loans are:

Which of the following is not a correct statement about money?

Which of the following observations concerning money market mutual funds is not true?

Which of the following is true?

If a bank had demand deposits of $80 million and it faced a 25 percent required reserve ratio, it would be able to have a maximum amount of how many dollars worth of loans?

Gresham's Law states that:

Potential money creation is:

If a bank receiving a new deposit of $200,000 would be able, as a result, to increase their lending by at most $120,000, then the required reserve ratio equals:

Which of the following assets is most liquid?

A bank's capital is: