European banks began with which of the following?
monarchs were the first bankers, lending out cash to help the poor learn to craft
churches were the first bankers, lending out cash to help the poor learn a craft.
goldsmiths were the first bankers, and the paper receipts they issued for gold held on deposit became valued as money
Fishermen were the first bankers and the paper receipts they stored in the hulls of their ships became valued as money
Which of the following does not appear on the asset side of a bank's balance sheet?R
required reserves
checkable deposits
loans
excess reserves
Which of the following is not an interest-bearing asset of commercial banks?
securities
All of the above are interest-bearing assets of commercial banks
Banks would be expected to minimize holding excess reserves because the practice is-
illegal
not profitable
technically difficult
subject to a stiff excess reserves tax
Which of the following appears in the asset side of the bank's balance sheet?
none of the answers are correct
all of the answers above are correct
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 -
$2,000
$8,000
$9,000
$10,000
If the required reserve ration is a uniform 25% on all deposits, the money multiplier will be-
4.00
2.50
0.40
0.25
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-
increases $100,000
increases $500,000
increases $600,000
decreases $500,000
If the required reserve ratio decreases, the-
money multiplier increases
money multiplier decreases
amount of excess reserves the bank has decreases
money multiplier stays the same
Decisions regarding purchases and sales of government securities by the Fed are made by the-
Federal Deposit Insurance Commission (FDIC)
Discount committee (DC)
Federal Open Market Committee (FOMC)
Federal Funds Committee (FFC)
The cost to a member bank of borrowing from the federal reserves is called the-
reserve requirement
price of securities in the open market
discount rate
yield on government bonds
Which of the following policy actions by the Fed would cause the money supply to decrease?
An open-market purchase of the government securities
decrease in required reserve ratios
increase in the discount rates
decrease in the discount rate
The rate of interest charged by the federal reserve to member banks for reserves borrowed from the Fed is known as the-
federal funds rate
repurchase rate
Q-ceiling rate
Which of the following actions by the Fed would increase the money supply?
reducing the required reserve ratio
selling government bonds in the open market
increasing the discount rate
none of the answers above are correct
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.
$8,000 worth of new money
$2,000 worth of new money
$10,000 worth of new money
$40,000 worth of new money
The required reserve ratio for a bank is set by-
congress
the bank itself
the treasury department
the banking system
the federal reserve
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-
$10
$90
$100
$1,000
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?
$0
$5 million
$ 10 million
$15 million
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-
$15,000
$75,000
$5,000
When the Fed purchases government securities, it-
increases banks' reserves and makes possible an increase in the money supply.
decreases banks' reserves and makes possible a decrease in the money supply.
automatically raises the discount rate
uses discounting operations to influence margin requirements
has no effect on either the money supply or the discount rate.
