Accounting
Anthropology
Archaeology
Art History
Banking
Biology & Life Science
Business
Business Communication
Business Development
Business Ethics
Business Law
Chemistry
Communication
Computer Science
Counseling
Criminal Law
Curriculum & Instruction
Design
Earth Science
Economic
Education
Engineering
Finance
History & Theory
Humanities
Human Resource
International Business
Investments & Securities
Journalism
Law
Management
Marketing
Medicine
Medicine & Health Science
Nursing
Philosophy
Physic
Psychology
Real Estate
Science
Social Science
Sociology
Special Education
Speech
Visual Arts
Banking
Q:
If a bank has excess reserves of $7,000 and demand deposit liabilities of $100,000, and if the reserve requirement is 10 percent, then the bank has actual reserves of
A. $14,000.
B. $17,000.
C. $22,000.
D. $27,000.
Q:
If a bank has excess reserves of $7,000 and demand deposit liabilities of $100,000, and if the reserve requirement is 15 percent, then the bank has actual reserves of
A. $17,000.
B. $22,000.
C. $27,000.
D. $29,000.
Q:
If a bank has excess reserves of $4,000 and demand deposit liabilities of $100,000, and if the reserve requirement is 10 percent, then the bank has actual reserves of
A. $14,000.
B. $19,000.
C. $24,000.
D. $29,000.
Q:
If a bank has excess reserves of $4,000 and demand deposit liabilities of $100,000, and if the reserve requirement is 15 percent, then the bank has actual reserves of
A. $17,000.
B. $19,000.
C. $24,000.
D. $29,000.
Q:
If a bank has excess reserves of $15,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has total reserves of
A. $11,000.
B. $21,000.
C. $31,000.
D. $41,000.
Q:
If a bank has excess reserves of $5,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has actual reserves of
A. $11,000.
B. $20,000.
C. $21,000.
D. $26,000.
Q:
If a bank has excess reserves of $20,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has total reserves of
A. $16,000.
B. $20,000.
C. $26,000.
D. $36,000.
Q:
If a bank has excess reserves of $10,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has actual reserves of
A. $16,000.
B. $20,000.
C. $26,000.
D. $36,000.
Q:
If reserves in the banking system increase by $200, then checkable deposits will increase by $500 in the simple model of deposit creation when the required reserve ratio is
A. 0.04.
B. 0.25.
C. 0.40.
D. 0.50.
Q:
If reserves in the banking system increase by $100, then checkable deposits will increase by $2,000 in the simple model of deposit creation when the required reserve ratio is
A. 0.01.
B. 0.05.
C. 0.10.
D. 0.20.
Q:
If reserves in the banking system increase by $100, then checkable deposits will increase by $100 in the simple model of deposit creation when the required reserve ratio is
A. 0.01.
B. 0.10.
C. 0.20.
D. 1.00.
Q:
If reserves in the banking system increase by $100, then checkable deposits will increase by $667 in the simple model of deposit creation when the required reserve ratio is
A. 0.01.
B. 0.05.
C. 0.15.
D. 0.20.
Q:
If reserves in the banking system increase by $100, then checkable deposits will increase by $400 in the simple model of deposit creation when the required reserve ratio is
A. 0.01.
B. 0.10.
C. 0.20.
D. 0.25.
Q:
In the simple deposit expansion model, a decline in checkable deposits of $500 when the required reserve ratio is equal to 20 percent implies that the Fed
A. sold $250 in government bonds.
B. sold $100 in government bonds.
C. sold $50 in government bonds.
D. purchased $100 in government bonds.
Q:
In the simple deposit expansion model, a decline in checkable deposits of $500 when the required reserve ratio is equal to 10 percent implies that the Fed
A. sold $500 in government bonds.
B. sold $50 in government bonds.
C. purchased $50 in government bonds.
D. purchased $500 in government bonds.
Q:
In the simple deposit expansion model, a decline in checkable deposits of $1,000 when the required reserve ratio is equal to 10 percent implies that the Fed
A. sold $1,000 in government bonds.
B. sold $100 in government bonds.
C. purchased $1,000 in government bonds.
D. purchased $100 in government bonds.
Q:
In the simple deposit expansion model, a decline in checkable deposits of $1,000 when the required reserve ratio is equal to 20 percent implies that the Fed
A. sold $200 in government bonds.
B. sold $500 in government bonds.
C. purchased $200 in government bonds.
D. purchased $500 in government bonds.
Q:
In the simple deposit expansion model, an expansion in checkable deposits of $1,000 when the required reserve ratio is equal to 10 percent implies that the Fed
A. sold $1,000 in government bonds.
B. sold $100 in government bonds.
C. purchased $1000 in government bonds.
D. purchased $100 in government bonds.
Q:
In the simple deposit expansion model, an expansion in checkable deposits of $1,000 when the required reserve ratio is equal to 20 percent implies that the Fed
A. sold $200 in government bonds.
B. sold $500 in government bonds.
C. purchased $200 in government bonds.
D. purchased $500 in government bonds.
Q:
In the simple deposit expansion model, if the required reserve ratio is 10 percent and the Fed increases reserves by $100, checkable deposits can potentially expand by
A. $100.
B. $250.
C. $500.
D. $1,000.
Q:
In the simple deposit expansion model, if the required reserve ratio is 20 percent and the Fed increases reserves by $100, checkable deposits can potentially expand by
A. $100.
B. $250.
C. $500.
D. $1,000.
Q:
In the simple deposit expansion model, if the banking system has excess reserves of $75, and the required reserve ratio is 20%, the potential expansion of checkable deposits is
A. $75.
B. $750.
C. $37.50.
D. $375.
Q:
A simple deposit multiplier equal to four implies a required reserve ratio equal to
A. 100 percent.
B. 50 percent.
C. 25 percent.
D. 0 percent.
Q:
A simple deposit multiplier equal to two implies a required reserve ratio equal to
A. 100 percent.
B. 50 percent.
C. 25 percent.
D. 0 percent.
Q:
A simple deposit multiplier equal to one implies a required reserve ratio equal to
A. 100 percent.
B. 50 percent.
C. 25 percent.
D. 0 percent.
Q:
If the required reserve ratio is 25 percent, the simple deposit multiplier is
A. 5.0.
B. 2.5.
C. 4.0.
D. 10.0.
Q:
If the required reserve ratio is 20 percent, the simple deposit multiplier is
A. 5.0.
B. 2.5.
C. 4.0.
D. 10.0.
Q:
If the required reserve ratio is 15 percent, the simple deposit multiplier is
A. 15.0.
B. 1.5.
C. 6.67.
D. 3.33.
Q:
If the required reserve ratio is 10 percent, the simple deposit multiplier is
A. 5.0.
B. 2.5.
C. 100.0.
D. 10.0
Q:
If reserves in the banking system increase by $100, then checkable deposits will increase by $500 in the simple model of deposit creation when the required reserve ratio is
A. 0.01.
B. 0.10.
C. 0.05.
D. 0.20
Q:
If reserves in the banking system increase by $100, then checkable deposits will increase by $1000 in the simple model of deposit creation when the required reserve ratio is
A. 0.01.
B. 0.10.
C. 0.05.
D. 0.20.
Q:
The simple deposit multiplier can be expressed as the ratio of the
A. change in reserves in the banking system divided by the change in deposits.
B. change in deposits divided by the change in reserves in the banking system.
C. required reserve ratio divided by the change in reserves in the banking system.
D. change in deposits divided by the required reserve ratio.
Q:
In the simple model of multiple deposit creation in which banks do not hold excess reserves, the increase in checkable deposits equals the product of the change in reserves and the
A. reciprocal of the excess reserve ratio.
B. simple deposit expansion multiplier.
C. reciprocal of the simple deposit multiplier.
D. discount rate.
Q:
In the simple deposit expansion model, if the Fed extends a $100 discount loan to a bank that previously had no excess reserves, deposits in the banking system can potentially increase by
A. $10.
B. $100.
C. $100 times the reciprocal of the required reserve ratio.
D. $100 times the required reserve ratio.
Q:
In the simple deposit expansion model, if the Fed extends a $100 discount loan to a bank that previously had no excess reserves, the bank can now increase its loans by
A. $10.
B. $100.
C. $100 times the reciprocal of the required reserve ratio.
D. $100 times the required reserve ratio.
Q:
In the simple deposit expansion model, if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves, deposits in the banking system can potentially increase by
A. $10.
B. $100.
C. $100 times the reciprocal of the required reserve ratio.
D. $100 times the required reserve ratio.
Q:
In the simple deposit expansion model, if the Fed purchases $100 worth of bonds from a bank that previously had no excess reserves, the bank can now increase its loans by
A. $10.
B. $100.
C. $100 times the reciprocal of the required reserve ratio.
D. $100 times the required reserve ratio.
Q:
If the required reserve ratio is equal to 10 percent, a single bank can increase its loans up to a maximum amount equal to
A. its excess reserves.
B. 10 times its excess reserves.
C. 10 percent of its excess reserves.
D. its total reserves.
Q:
When the Fed supplies the banking system with an extra dollar of reserves, deposits ________ by ________ than one dollar–a process called multiple deposit creation.
A. increase; less
B. increase; more
C. decrease; less
D. decrease; more
Q:
When the Fed supplies the banking system with an extra dollar of reserves, deposits increase by more than one dollar–a process called
A. extra deposit creation.
B. multiple deposit creation.
C. expansionary deposit creation.
D. stimulative deposit creation.
Q:
Explain two ways by which the Federal Reserve System can increase the monetary base. Why is the effect of Federal Reserve actions on bank reserves less exact than the effect on the monetary base?
Q:
The relationship between borrowed reserves (BR), the nonborrowed monetary base (MBn), and the monetary base (MB) is
A. MB = MBn - BR.
B. BR = MBn - MB.
C. BR = MB - MBn.
D. MB = BR - MBn.
Q:
Subtracting borrowed reserves from the monetary base obtains
A. reserves.
B. high-powered money.
C. the nonborrowed monetary base.
D. the borrowed monetary base.
Q:
The Fed does not tightly control the monetary base because it does NOT completely control
A. open market purchases.
B. open market sales.
C. borrowed reserves.
D. the discount rate.
Q:
Suppose your payroll check is directly deposited to your checking account. Everything else held constant, total reserves in the banking system ________ and the monetary base ________.
A. remain unchanged; remains unchanged
B. remain unchanged; increases
C. decrease; increases
D. decrease; decreases
Q:
Suppose a person cashes his payroll check and holds all the funds in the form of currency. Everything else held constant, total reserves in the banking system ________ and the monetary base ________.
A. remain unchanged; increases
B. decrease; increases
C. decrease; remains unchanged
D. decrease; decreases
Q:
An increase in ________ leads to an equal ________ in the monetary base in the short run.
A. float; decrease
B. float; increase
C. discount loans; decrease
D. Treasury deposits at the Fed; increase
Q:
The monetary base declines when
A. the Fed extends discount loans.
B. Treasury deposits at the Fed decrease.
C. float increases.
D. the Fed sells securities.
Q:
A decrease in ________ leads to an equal ________ in the monetary base in the short run.
A. float; increase
B. float; decrease
C. Treasury deposits at the Fed; decrease
D. discount loans; increase
Q:
There are two ways in which the Fed can provide additional reserves to the banking system: it can ________ government bonds or it can ________ discount loans to commercial banks.
A. sell; extend
B. sell; call in
C. purchase; extend
D. purchase; call in
Q:
If the Fed decides to reduce bank reserves, it can
A. purchase government bonds.
B. extend discount loans to banks.
C. sell government bonds.
D. print more currency.
Q:
When the Federal Reserve calls in a discount loan from a bank, the monetary base ________ and reserves ________.
A. remains unchanged; decrease
B. remains unchanged; increase
C. decreases; decrease
D. decreases; remains unchanged
Q:
When the Federal Reserve extends a discount loan to a bank, the monetary base ________ and reserves ________.
A. remains unchanged; decrease
B. remains unchanged; increase
C. increases; increase
D. increases; remain unchanged
Q:
All else the same, when the Fed calls in a $100 discount loan previously extended to the First National Bank, reserves in the banking system
A. increase by $100.
B. increase by more than $100.
C. decrease by $100.
D. decrease by more than $100.
Q:
When the Fed extends a $100 discount loan to the First National Bank, reserves in the banking system
A. increase by $100.
B. increase by more than $100.
C. decrease by $100.
D. decrease by more than $100.
Q:
When the Fed sells $100 worth of bonds to a primary dealer, reserves in the banking system
A. increase by $100.
B. increase by more than $100.
C. decrease by $100.
D. decrease by more than $100.
Q:
When the Fed buys $100 worth of bonds from a primary dealer, reserves in the banking system
A. increase by $100.
B. increase by more than $100.
C. decrease by $100.
D. decrease by more than $100.
Q:
When a primary dealer buys a government bond from the Federal Reserve, reserves in the banking system ________ and the monetary base ________, everything else held constant.
A. increase; increases
B. increase; decreases
C. decrease; increases
D. decrease; decreases
Q:
When a primary dealer sells a government bond to the Federal Reserve, reserves in the banking system ________ and the monetary base ________, everything else held constant.
A. increase; increases
B. increase; decreases
C. decrease; increases
D. decrease; decreases
Q:
When the Federal Reserve sells a government bond to a primary dealer, reserves in the banking system ________ and the monetary base ________, everything else held constant.
A. increase; increases
B. increase; decreases
C. decrease; increases
D. decrease; decreases
Q:
When the Federal Reserve purchases a government bond from a primary dealer, reserves in the banking system ________ and the monetary base ________, everything else held constant.
A. increase; increases
B. increase; decreases
C. decrease; increases
D. decrease; decreases
Q:
Purchases and sales of government securities by the Federal Reserve are called
A. discount loans.
B. federal fund transfers.
C. open market operations.
D. swap transactions.
Q:
High-powered money minus currency in circulation equals
A. reserves.
B. the borrowed base.
C. the nonborrowed base.
D. discount loans.
Q:
High-powered money minus reserves equals
A. reserves.
B. currency in circulation.
C. the monetary base.
D. the nonborrowed base.
Q:
The monetary base minus reserves equals
A. currency in circulation.
B. the borrowed base.
C. the nonborrowed base.
D. discount loans.
Q:
The monetary base minus currency in circulation equals
A. reserves.
B. the borrowed base.
C. the nonborrowed base.
D. discount loans.
Q:
When banks borrow money from the Federal Reserve, these funds are called
A. federal funds.
B. discount loans.
C. federal loans.
D. Treasury funds.
E.
Q:
The interest rate the Fed charges banks borrowing from the Fed is the
A. federal funds rate.
B. Treasury bill rate.
C. discount rate.
D. prime rate.
Q:
Suppose that from a new checkable deposit, First National Bank holds eight million dollars on deposit with the Federal Reserve, nine million dollars in excess reserves, and faces a required reserve ratio of ten percent. Given this information, we can say First National Bank has ________ million dollars in vault cash.
A. one
B. two
C. nine
D. ten
Q:
Suppose that from a new checkable deposit, First National Bank holds eight million dollars on deposit with the Federal Reserve, nine million dollars in excess reserves, and faces a required reserve ratio of ten percent. Given this information, we can say First National Bank has ________ million dollars in required reserves.
A. one
B. two
C. nine
D. ten
Q:
Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, one million dollars in required reserves, and faces a required reserve ratio of ten percent. Given this information, we can say First National Bank has ________ million dollars on deposit with the Federal Reserve.
A. one
B. two
C. eight
D. ten
Q:
Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, one million dollars in required reserves, and faces a required reserve ratio of ten percent. Given this information, we can say First National Bank has ________ million dollars in excess reserves.
A. one
B. two
C. nine
D. ten
Q:
Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, nine million dollars in excess reserves, and faces a required reserve ratio of ten percent. Given this information, we can say First National Bank has ________ million dollars on deposit with the Federal Reserve.
A. one
B. two
C. eight
D. ten
Q:
Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, nine million dollars in excess reserves, and faces a required reserve ratio of ten percent. Given this information, we can say First National Bank has ________ million dollars in required reserves.
A. one
B. two
C. eight
D. ten
Q:
Suppose that from a new checkable deposit, First National Bank holds eight million dollars on deposit with the Federal Reserve, one million dollars in required reserves, and faces a required reserve ratio of ten percent. Given this information, we can say First National Bank has ________ million dollars in vault cash.
A. two
B. eight
C. nine
D. ten
Q:
Suppose that from a new checkable deposit, First National Bank holds eight million dollars on deposit with the Federal Reserve, one million dollars in required reserves, and faces a required reserve ratio of ten percent. Given this information, we can say First National Bank has ________ million dollars in excess reserves.
A. two
B. eight
C. nine
D. ten
Q:
Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and nine million dollars in excess reserves. Given this information, we can say First National Bank faces a required reserve ratio of ________ percent.
A. ten
B. twenty
C. eighty
D. ninety
Q:
Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and nine million dollars in excess reserves. Given this information, we can say First National Bank has ________ million dollars in required reserves.
A. one
B. two
C. eight
D. ten
Q:
Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and one million dollars in required reserves. Given this information, we can say First National Bank faces a required reserve ratio of ________ percent.
A. ten
B. twenty
C. eighty
D. ninety
Q:
Suppose that from a new checkable deposit, First National Bank holds two million dollars in vault cash, eight million dollars on deposit with the Federal Reserve, and one million dollars in required reserves. Given this information, we can say First National Bank has ________ million dollars in excess reserves.
A. three
B. nine
C. ten
D. eleven