1.What is one significant characteristics of fractional reserve banking?
a.Banks are vulnerable to “panic” or “runs”
b.Banks can only lend an amount equal to its checkable deposits
c.Gold serves as the basis for determining the stability of banks
d.Government regulations of banks is not needed because there is deposit insurance
2.A bank has $2 million in checkable deposits. In the bank’s balance sheet, this would be an example of:
a.An asset
b.A liability
c.Net worth
d.Capital stock
3.The above table specifies the:
a.Monetary multipliers for the economy
b.Reserve requirements of depository institutions
c.Vault cash or till money requirement of depository institutions
d.Checkable deposits requirements as a percentage of assets and liabilities for depository institutions
4.When bankers hold excess reserves:
a.The size of the monetary multiplier increases
b.The money-creating potential of the banking system increases
c.The money-creating potential of the banking system decreases
d.There is no change in the money-crating potential of the baking system
5.If the Federal Reserve System sells $5 billion of government securities to the commercial banking system, the deposit reserves of commercial banks would:
a.Increase by $5 billion
b.Decrease by $5 billion
c.Be added to next worth
d.Remain the same
6.The transactions demand for money is least likely to be a function of the:
a.Price level
b.Interest rate
c.Level of national income
d.Frequency of wage and salary payments
7.If the interest rate increase, there will be a
:
a.Decrease in the amount of money held as assets
b.Decrease in the transaction demand for money
c.Increase in the transaction demand for money
d.Increase in the amount of money held as assets
8.Bond prices and interest rates are:
a.Directly related
b.Positively related
c.Negatively related
d.Unrelated
9.In the consolidated balance sheet of the Federal Reserve Banks, commercial bank reserve held by the Federal Reserve are:
a.A liability of the Federal Reserve Banks and commercial banks
b.An asset of the Federal Reserve Banks and commercial banks
c.A liability of the Federal Reserve Banks and an asset for commercial banks
d.An asset of the Federal Reserve Banks and a liability for commercial banks
10. The lending ability of commercial banks increase when the:
a.Reserve ratios is raised
b.Treasury collects tax receipts
c.Central banks sell securities it the open market
d.Central banks by securities in the open market
a.Banks are vulnerable to “panic” or “runs”
b.Banks can only lend an amount equal to its checkable deposits
c.Gold serves as the basis for determining the stability of banks
d.Government regulations of banks is not needed because there is deposit insurance
2.A bank has $2 million in checkable deposits. In the bank’s balance sheet, this would be an example of:
a.An asset
b.A liability
c.Net worth
d.Capital stock
3.The above table specifies the:
a.Monetary multipliers for the economy
b.Reserve requirements of depository institutions
c.Vault cash or till money requirement of depository institutions
d.Checkable deposits requirements as a percentage of assets and liabilities for depository institutions
4.When bankers hold excess reserves:
a.The size of the monetary multiplier increases
b.The money-creating potential of the banking system increases
c.The money-creating potential of the banking system decreases
d.There is no change in the money-crating potential of the baking system
5.If the Federal Reserve System sells $5 billion of government securities to the commercial banking system, the deposit reserves of commercial banks would:
a.Increase by $5 billion
b.Decrease by $5 billion
c.Be added to next worth
d.Remain the same
6.The transactions demand for money is least likely to be a function of the:
a.Price level
b.Interest rate
c.Level of national income
d.Frequency of wage and salary payments
7.If the interest rate increase, there will be a
:a.Decrease in the amount of money held as assets
b.Decrease in the transaction demand for money
c.Increase in the transaction demand for money
d.Increase in the amount of money held as assets
8.Bond prices and interest rates are:
a.Directly related
b.Positively related
c.Negatively related
d.Unrelated
9.In the consolidated balance sheet of the Federal Reserve Banks, commercial bank reserve held by the Federal Reserve are:
a.A liability of the Federal Reserve Banks and commercial banks
b.An asset of the Federal Reserve Banks and commercial banks
c.A liability of the Federal Reserve Banks and an asset for commercial banks
d.An asset of the Federal Reserve Banks and a liability for commercial banks
10. The lending ability of commercial banks increase when the:
a.Reserve ratios is raised
b.Treasury collects tax receipts
c.Central banks sell securities it the open market
d.Central banks by securities in the open market