Exam 15: Money, Banking, and Central Banking

Let us suppose that you apply for a bank loan. You tell the bank that you are going to remodel your house, but after you get the loan you go to Las Vegas to gamble with the money. Your behavior is an example of

Because deposits are insured by the FDIC, most of us do NOT look at the lending behavior of our banks. This creates a(n) ________ problem.

If the actual money multiplier equals the potential money multiplier and if the Federal Reserve wishes to increase the money supply by $500 when the reserve ratio is 10 percent, it should

Which of the following is NOT a reason that people tend to deposit their funds with banks rather than lend their funds directly to other individuals?

Which of the following is NOT included in the money supply when the transactions approach is used?

If a $1 million open market purchase by the Fed generates a new deposit at a bank that immediately causes the bank's reserves held at the Fed to increase by $1 million, then the T-account effects are that the bank's assets and liabilities ________ by $1 million and that the Fed's assets and liabilities ________ by $1 million.

An increase in the interest rate would induce people to

The process by which financial institutions accept savings from businesses, households and governments and lend the savings to other businesses, households and governments is

What is a fractional reserve banking system? How long has the fractional reserve banking system been in existence?

Which of the following is solely responsible for determining changes in the money supply in the United States?

The key official definition of the money supply is

The degree to which an asset can be acquired or disposed of without much loss of nominal value or transaction costs is known as

-Based on the above table, the reserve ratio for the banking system is

Which of the following is the central bank for the United States?

A barter arrangement basically means

The most important function of money is when money is used as a

The term "fiduciary" comes from the Latin fiducia, which means

What are reserves? Discuss the various types of reserves used in the U.S. banking system.

A $200 price tag on a handbag in a department store is an example of money serving as a

Since 1982, banks and thrift institutions have offered a type of savings account that yields a market rate of interest with a minimum balance and a limit on transactions. These accounts, which have no minimum maturity, are known as