Lena O
Quiz by , created more than 1 year ago

Economics SG

14
0
0
Lena O
Created by Lena O over 5 years ago
Close

Econ Study Guide Chapter 19

Question 1 of 20

1

European banks began with which of the following?

Select one 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

Explanation

Question 2 of 20

1

Which of the following does not appear on the asset side of a bank's balance sheet?R

Select one of the following:

  • required reserves

  • checkable deposits

  • loans

  • excess reserves

Explanation

Question 3 of 20

1

Which of the following is not an interest-bearing asset of commercial banks?

Select one of the following:

  • required reserves

  • securities

  • loans

  • All of the above are interest-bearing assets of commercial banks

Explanation

Question 4 of 20

1

Banks would be expected to minimize holding excess reserves because the practice is-

Select one of the following:

  • illegal

  • not profitable

  • technically difficult

  • subject to a stiff excess reserves tax

Explanation

Question 5 of 20

1

Which of the following appears in the asset side of the bank's balance sheet?

Select one of the following:

  • excess reserves

  • loans

  • required reserves

  • none of the answers are correct

  • all of the answers above are correct

Explanation

Question 6 of 20

1

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 -

Select one of the following:

  • $2,000

  • $8,000

  • $9,000

  • $10,000

Explanation

Question 7 of 20

1

If the required reserve ration is a uniform 25% on all deposits, the money multiplier will be-

Select one of the following:

  • 4.00

  • 2.50

  • 0.40

  • 0.25

Explanation

Question 8 of 20

1

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-

Select one of the following:

  • increases $100,000

  • increases $500,000

  • increases $600,000

  • decreases $500,000

Explanation

Question 9 of 20

1

If the required reserve ratio decreases, the-

Select one of the following:

  • money multiplier increases

  • money multiplier decreases

  • amount of excess reserves the bank has decreases

  • money multiplier stays the same

Explanation

Question 10 of 20

1

Decisions regarding purchases and sales of government securities by the Fed are made by the-

Select one of the following:

  • Federal Deposit Insurance Commission (FDIC)

  • Discount committee (DC)

  • Federal Open Market Committee (FOMC)

  • Federal Funds Committee (FFC)

Explanation

Question 11 of 20

1

The cost to a member bank of borrowing from the federal reserves is called the-

Select one of the following:

  • reserve requirement

  • price of securities in the open market

  • discount rate

  • yield on government bonds

Explanation

Question 12 of 20

1

Which of the following policy actions by the Fed would cause the money supply to decrease?

Select one of the following:

  • An open-market purchase of the government securities

  • decrease in required reserve ratios

  • increase in the discount rates

  • decrease in the discount rate

Explanation

Question 13 of 20

1

The rate of interest charged by the federal reserve to member banks for reserves borrowed from the Fed is known as the-

Select one of the following:

  • federal funds rate

  • discount rate

  • repurchase rate

  • Q-ceiling rate

Explanation

Question 14 of 20

1

Which of the following actions by the Fed would increase the money supply?

Select one of the following:

  • reducing the required reserve ratio

  • selling government bonds in the open market

  • increasing the discount rate

  • none of the answers above are correct

Explanation

Question 15 of 20

1

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.

Select one of the following:

  • $8,000 worth of new money

  • $2,000 worth of new money

  • $10,000 worth of new money

  • $40,000 worth of new money

Explanation

Question 16 of 20

1

The required reserve ratio for a bank is set by-

Select one of the following:

  • congress

  • the bank itself

  • the treasury department

  • the banking system

  • the federal reserve

Explanation

Question 17 of 20

1

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-

Select one of the following:

  • $10

  • $90

  • $100

  • $1,000

Explanation

Question 18 of 20

1

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?

Select one of the following:

  • $0

  • $5 million

  • $ 10 million

  • $15 million

Explanation

Question 19 of 20

1

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-

Select one of the following:

  • $10,000

  • $15,000

  • $75,000

  • $5,000

  • $0

Explanation

Question 20 of 20

1

When the Fed purchases government securities, it-

Select one of the following:

  • 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.

Explanation

Previous
Check answer
Next