Exam 17: Income, Poverty and Health Care

Assume the reserve requirement is 10 percent. First National Bank has vault cash and deposits with the Fed of $40 million, loans and securities of $360 million, and demand deposits of $400 million. First National:

Suppose you found $10,000 hidden under a rock and deposited it in a demand deposit account at your bank. If the reserve requirement was 20 percent, your deposit would initially add ____ to total demand deposits and over time increase the money supply by a maximum of ____.

If a bank gets a $100,000 new deposit, chooses to lend out $75,000, and increases its excess reserves by $5,000 at the same time, then the reserve requirement is:

One major problem with some commodity monies is that:

When the Fed wants to expand the money supply through open market operations, it:

The Federal Reserve banks are owned by:

If you deposit $8,000 in a bank, calculate how much the bank must keep as required reserves and how much it can loan out if the required reserve ratio was 5 percent. If it was 8 percent? 13 percent? 26 percent?

The larger the fraction of an investment financed by borrowing, the greater the potential for both profits and losses from that investment.

The money ____ equals 1 divided by the reserve requirement. The larger the reserve requirement, the ____ the money multiplier.

Which of the following observations is true of nontransaction deposits?

Which of the following is not a function of the Federal Reserve System?

Exhibit 17-1 ​ 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 Exhibit 17-1. If the required reserve ratio is 10 percent, what is the level of the bank's excess reserves? How much could it loan out as a result?

Which of the following is true?

If a bank gets a $100,000 new deposit, chooses to lend out $85,000, and increases its excess reserves by $5,000 at the same time, then the reserve requirement is:

Exhibit 17-1 ​ 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 Exhibit 17-1. If the required reserve ratio is 10 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?

Which of the following is true?

If the Fed paid a lower interest rate to banks on their reserves at the Fed, the money supply would tend to rise.

Suppose all banks are subject to a uniform reserve requirement of 20 percent and that the Gamblers Last Chance Bank of Las Vegas has zero excess reserves. If a new customer deposits $10,000, the bank can now extend new loans up to a maximum of:

Which of the following changes would clearly increase the supply of money in the banking system?

If policy makers wanted to use both monetary and fiscal policy to stimulate demand and reduce a high rate of unemployment, which of the following would be most appropriate?