17896467
Question 1
Question
European banks began with which of the following?
Answer
-
monarchs were the first bankers, lending out cash to help the poor learn to craft
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churches were the first bankers, lending out cash to help the poor learn a craft.
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goldsmiths were the first bankers, and the paper receipts they issued for gold held on deposit became valued as money
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Fishermen were the first bankers and the paper receipts they stored in the hulls of their ships became valued as money
Question 2
Question
Which of the following does not appear on the asset side of a bank's balance sheet?R
Answer
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required reserves
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checkable deposits
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loans
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excess reserves
Question 3
Question
Which of the following is not an interest-bearing asset of commercial banks?
Answer
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required reserves
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securities
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loans
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All of the above are interest-bearing assets of commercial banks
Question 4
Question
Banks would be expected to minimize holding excess reserves because the practice is-
Answer
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illegal
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not profitable
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technically difficult
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subject to a stiff excess reserves tax
Question 5
Question
Which of the following appears in the asset side of the bank's balance sheet?
Answer
-
excess reserves
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loans
-
required reserves
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none of the answers are correct
-
all of the answers above are correct
Question 6
Question
Assume a simplified banking system in which all banks are subject to a uniform reserve requirement of 20% and checkable deposits are the only form of money. A bank that received a new checkable deposit of $10,000would be able to extend new loans up to a maximum of -
Answer
-
$2,000
-
$8,000
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$9,000
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$10,000
Question 7
Question
If the required reserve ration is a uniform 25% on all deposits, the money multiplier will be-
Answer
-
4.00
-
2.50
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0.40
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0.25
Question 8
Question
Assume a simplified banking system subject to a 20% required reserve ratio. If there is an initial increase in excess reserves of $100,000, the money supply-
Answer
-
increases $100,000
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increases $500,000
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increases $600,000
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decreases $500,000
Question 9
Question
If the required reserve ratio decreases, the-
Answer
-
money multiplier increases
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money multiplier decreases
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amount of excess reserves the bank has decreases
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money multiplier stays the same
Question 10
Question
Decisions regarding purchases and sales of government securities by the Fed are made by the-
Answer
-
Federal Deposit Insurance Commission (FDIC)
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Discount committee (DC)
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Federal Open Market Committee (FOMC)
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Federal Funds Committee (FFC)
Question 11
Question
The cost to a member bank of borrowing from the federal reserves is called the-
Answer
-
reserve requirement
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price of securities in the open market
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discount rate
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yield on government bonds
Question 12
Question
Which of the following policy actions by the Fed would cause the money supply to decrease?
Answer
-
An open-market purchase of the government securities
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decrease in required reserve ratios
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increase in the discount rates
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decrease in the discount rate
Question 13
Question
The rate of interest charged by the federal reserve to member banks for reserves borrowed from the Fed is known as the-
Answer
-
federal funds rate
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discount rate
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repurchase rate
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Q-ceiling rate
Question 14
Question
Which of the following actions by the Fed would increase the money supply?
Answer
-
reducing the required reserve ratio
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selling government bonds in the open market
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increasing the discount rate
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none of the answers above are correct
Question 15
Question
In Exhibit 19-5, if the required reserve ratio is 20% for all banks, and every bank in the banking system loans out all of its excess reserves. Then a $10,000 deposit from Mr.Brown in checkable deposits could create for the entire banking system.
Answer
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$8,000 worth of new money
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$2,000 worth of new money
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$10,000 worth of new money
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$40,000 worth of new money
Question 16
Question
The required reserve ratio for a bank is set by-
Answer
-
congress
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the bank itself
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the treasury department
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the banking system
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the federal reserve
Question 17
Question
Assume we have a simplified banking system in balance-sheet equilibrium. Also, assume that all banks are subject to a uniform 10% reserve requirement and demand deposits are the only form of money. A commercial bank receiving a new demand deposit of $100 would be able to extend new loans in the amount of-
Answer
-
$10
-
$90
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$100
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$1,000
Question 18
Question
A bank faces a required reserve ratio of 5%. If the bank has $200 million of checkable deposits and $15 million in total reserves, then how large are the bank's excess reserves?
Answer
-
$0
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$5 million
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$ 10 million
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$15 million
Question 19
Question
A bank currently has checkable deposits of $100,000 reserves of $30,000 and loans of $70,000. If the required reserve ratio is lowered from 20% to 15 %, this bank can increase its loans by-
Answer
-
$10,000
-
$15,000
-
$75,000
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$5,000
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$0
Question 20
Question
When the Fed purchases government securities, it-
Answer
-
increases banks' reserves and makes possible an increase in the money supply.
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decreases banks' reserves and makes possible a decrease in the money supply.
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automatically raises the discount rate
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uses discounting operations to influence margin requirements
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has no effect on either the money supply or the discount rate.
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