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| 1 | |
If the money multiplier is 1, the required reserve ratio must be: |
| | A) | greater than 100% |
| | B) | 100% |
| | C) | less than 100% |
| | D) | zero |
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| 2 | |
Answer the next question on the basis of the following information: the required reserve ratio is 10%; the system initially has no excess reserves; $20 billion in new currency is deposited into the system. The $20 billion in new deposits will initially create excess reserves of: |
| | A) | $2 billion |
| | B) | $18 billion |
| | C) | $20 billion |
| | D) | $200 billion |
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| 3 | |
Assume the Continental National Bank's balance statement is as follows:
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Assuming a legal reserve ratio of 20 percent, how much excess reserves would this bank have after a check for $15,000 is drawn and cleared against it? |
| | A) | $2,000 |
| | B) | $4,000 |
| | C) | $12,000 |
| | D) | $19,000 |
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| 4 | |
Sam draws a $100 check on his account at Bank A which is then deposited in Bank B. When this check is cleared: |
| | A) | neither Bank A's nor Bank B's deposits or reserves are affected |
| | B) | Bank A gains reserves equal to $100 and Bank B gains deposits equal to $100 |
| | C) | Bank A loses reserves and deposits equal to $100 |
| | D) | Bank B loses reserves and deposits equal to $100 |
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| 5 | |
The supply of money is increased whenever banks increase their excess reserves. |
| | A) | True |
| | B) | False |
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| 6 | |
Assume the banking system has no excess reserves with a reserve requirement of 20%. The reserve requirement is then dropped to 10%. As a result of this reduction: |
| | A) | the money multiplier will decrease |
| | B) | bank profitability will likely decrease |
| | C) | banks will be forced to accumulate reserves by reducing their lending activity |
| | D) | the money supply will likely increase |
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| 7 | |
A bank temporarily short of required reserves may remedy the situation by borrowing reserves: |
| | A) | in the bond market |
| | B) | in the Federal deposit market |
| | C) | from its own depositors |
| | D) | in the Federal funds market |
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| 8 | |
Commercial bank reserves are an asset both to commercial banks and to the Federal Reserve Bank holding them. |
| | A) | True |
| | B) | False |
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| 9 | |
The monetary multiplier is equal to: |
| | A) | one |
| | B) | the inverse of actual reserves minus required reserves |
| | C) | the inverse of one minus the required reserve ratio |
| | D) | the inverse of the required reserve ratio |
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| 10 | |
Answer the next question on the basis of the following table for a commercial bank:
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Refer to the above table. When the legal reserve ratio is 10 percent, the excess reserves of this single bank are: |
| | A) | $0 |
| | B) | $1,500 |
| | C) | $3,000 |
| | D) | $18,000 |
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