Exhibit 14-1 Exhibit 14-1 $\begin{array}{llll} &&\text {EUBANK}\\ \text {Assets }&&\text {Liabilities and Net Worth }\\ \hline\text { Deposits at the Fed } & \$ 40,000 &\text {Checkable deposits }&\$500,000\\ \text { Cash } & \$ 10,000 &\text {Net Worth }&\$20,000\\ \text { Loans } & \$ 300,000 \\ \text { Securities } & \$ 150,000 \\ \text { Fed Stock } & \$ 20,000 \end{array}$ -Refer to Exhibit 14-1.If the interest rate on loans is 10 percent,the annual cost to Eubank of holding excess reserves is

A) 10 percent of $500,000 B) 10 percent of net worth C) 10 percent of excess reserves D) $10,000 E) 0 A) 10 percent of $500,000 B) 10 percent of net worth C) 10 percent of excess reserves D) $10,000 E) 0

Exhibit 14-1 Exhibit 14-1 $\begin{array}{llll} &&\text {EUBANK}\\ \text {Assets }&&\text {Liabilities and Net Worth }\\ \hline\text { Deposits at the Fed } & \$ 40,000 &\text {Checkable deposits }&\$500,000\\ \text { Cash } & \$ 10,000 &\text {Net Worth }&\$20,000\\ \text { Loans } & \$ 300,000 \\ \text { Securities } & \$ 150,000 \\ \text { Fed Stock } & \$ 20,000 \end{array}$ -Refer to Exhibit 14-1.Assume the required reserve ratio is 10%.If Stu Dent deposits $10,000 in cash into his checkable deposit account,how much will Eubank have in excess reserves?

A) $10,000 B) $1,000 C) $9,000 D) $60,000 E) $6,000 A) $10,000 B) $1,000 C) $9,000 D) $60,000 E) $6,000

Exam 15: Banking and the Money Supply

Exhibit 14-1 Exhibit 14-1 EUBANK Assets Liabilities and Net Worth Deposits at the Fed \ 40,000 Checkable deposits \5 00,000 Cash \ 10,000 Net Worth \2 0,000 Loans \ 300,000 Securities \ 150,000 Fed Stock \ 20,000 -Refer to Exhibit 14-1.If the interest rate on loans is 10 percent,the annual cost to Eubank of holding excess reserves is

(Multiple Choice)

4.9/5

(80)

Question 101

Exhibit 14-1 Exhibit 14-1 EUBANK Assets Liabilities and Net Worth Deposits at the Fed \ 40,000 Checkable deposits \5 00,000 Cash \ 10,000 Net Worth \2 0,000 Loans \ 300,000 Securities \ 150,000 Fed Stock \ 20,000 -Refer to Exhibit 14-1.Assume the required reserve ratio is 10%.If Stu Dent deposits $10,000 in cash into his checkable deposit account,how much will Eubank have in excess reserves?

(Multiple Choice)

4.9/5

(67)

Question 102

M1 is the narrowest measure of the money supply.

(True/False)

4.9/5

(96)

Question 103

Raising the discount rate is

(Multiple Choice)

4.9/5

(88)

Question 104

As a lender,a bank holds an advantage over any individual person because

(Multiple Choice)

5.0/5

(66)

Question 105

The distinction between M1 and M2 has blurred over time because

(Multiple Choice)

4.8/5

(89)

Question 106

A bank's assets include all but one of the following.Which one is the exception?

(Multiple Choice)

4.9/5

(75)

Question 107

A $20 Federal Reserve note is

(Multiple Choice)

4.8/5

(78)

Question 108

To increase the money supply,the Fed might

(Multiple Choice)

4.9/5

(70)

Question 109

If the required reserve ratio is 10 percent and the Fed buys a $5,000 security from a depository institution,what happens to the money supply,using the simple multiplier?

(Multiple Choice)

4.9/5

(65)

Question 110

In order to increase the money supply,the banking system must have

(Multiple Choice)

4.8/5

(73)

Question 111

The Fed's purchase of U.S.government securities constitutes a(n)

(Multiple Choice)

4.7/5

(85)

Question 112

If a bank has $6,000 in checkable deposits and the required reserve ratio is 0.2,then the bank can lend

(Multiple Choice)

4.7/5

(82)

Question 113

On a bank's balance sheet,the value of its assets must equal

(Multiple Choice)

4.8/5

(83)

Question 114

Asymmetric information in financial markets exists when one party to the transaction has more information than the other regarding risks,alternatives,and other relevant details.

(True/False)

4.7/5

(71)

Question 115

The largest component of the Federal Reserve's asset portfolio is

(Multiple Choice)

4.8/5

(88)

Question 116

From a bank's point of view,its deposits are liabilities,not assets.

(True/False)

4.8/5

(73)

Question 117

A 2005 quarter is called token money because

(Multiple Choice)

5.0/5

(81)

Question 118

Banks have more expertise than individual households in making loans because banks

(Multiple Choice)

5.0/5

(78)

Question 119

The immediate effect of a bank's purchase of U.S.government securities from the Fed is a(n)

(Multiple Choice)

4.8/5

(87)

Question 120

Exam 15: Banking and the Money Supply

M1 is the narrowest measure of the money supply.

Raising the discount rate is

As a lender,a bank holds an advantage over any individual person because

The distinction between M1 and M2 has blurred over time because

A bank's assets include all but one of the following.Which one is the exception?

A $20 Federal Reserve note is

To increase the money supply,the Fed might

If the required reserve ratio is 10 percent and the Fed buys a $5,000 security from a depository institution,what happens to the money supply,using the simple multiplier?

In order to increase the money supply,the banking system must have

The Fed's purchase of U.S.government securities constitutes a(n)

If a bank has $6,000 in checkable deposits and the required reserve ratio is 0.2,then the bank can lend

On a bank's balance sheet,the value of its assets must equal

Asymmetric information in financial markets exists when one party to the transaction has more information than the other regarding risks,alternatives,and other relevant details.

The largest component of the Federal Reserve's asset portfolio is

From a bank's point of view,its deposits are liabilities,not assets.

A 2005 quarter is called token money because

Banks have more expertise than individual households in making loans because banks

The immediate effect of a bank's purchase of U.S.government securities from the Fed is a(n)

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand, supply, and Markets

Introduction to Macroeconomics

Tracking the Useconomy

Unemployment and Inflation

Productivity and Growth

Aaggregate Expenditure and Aggregate Demand

Baggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Federal Budgets and Public Policy

Money and the Financial System

Monetary Theory and Policy

Macro Policy Debate: Active or Passive

International Trade

Externalities and the Environment

International Finance

Economic Development

understanding Graphs

National Income Accounts

The Algebra of Demand-Side Equilibrium

Filters