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| 1 | |
Which of the following is not an asset to a commercial bank? |
| | A) | government securities held by the bank |
| | B) | loans outstanding |
| | C) | checkable deposits |
| | D) | reserves held at the Fed |
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| 2 | |
In order for a bank to increase its lending, it must be the case that: |
| | A) | actual reserves exceed required reserves |
| | B) | actual reserves equal required reserves |
| | C) | required reserves exceed actual reserves |
| | D) | assets exceed liabilities plus net worth |
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| 3 | |
Hassan deposits $50,000 in a commercial bank that is required to retain 20% in reserve. The deposit increases the lending capacity of the bank by: |
| | A) | $5,000 |
| | B) | $10,000 |
| | C) | $40,000 |
| | D) | $50,000 |
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| 4 | |
Claire deposits $20,000 in a commercial bank, which then sends the deposit to its account with the regional Federal Reserve Bank. If the reserve requirement is 5%, actual, required, and excess reserves increase by, respectively: |
| | A) | $20,000, $1,000, and $19,000 |
| | B) | $20,000, $5,000, and $15,000 |
| | C) | $20,000, $20,000, and $20,000 |
| | D) | $1,000, $1,000, and $19,000 |
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| 5 | |
If a bank sells $5,000 of government securities to the Fed, the deposit reserves of the bank would: |
| | A) | increase by $5,000 |
| | B) | decrease by $5,000 |
| | C) | increase by $5,000 times the required reserve ratio |
| | D) | decrease by $5,000 times the required reserve ratio |
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| 6 | |
Assume the required reserve ratio is 20%. If the commercial banking system has $20 million in excess reserves, the banking system could potentially create: |
| | A) | $20 million in new money |
| | B) | $100 million in new money |
| | C) | $120 million in new money |
| | D) | $200 million in new money |
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| 7 | |
Answer the next question based on the following information for the commercial banking system. All figures are in billions of dollars.
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Refer to the above data. If the reserve ratio is 10%, the commercial banking system has excess reserves of: |
| | A) | $0 |
| | B) | $5 billion |
| | C) | $15 billion |
| | D) | $40 billion |
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| 8 | |
Answer the next question based on the following information for the commercial banking system. All figures are in billions of dollars.
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Refer to the above data. If the reserve ratio is 10%, the maximum amount by which the commercial banking system can expand the money supply is: |
| | A) | $15 billion |
| | B) | $50 billion |
| | C) | $60 billion |
| | D) | $150 billion |
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| 9 | |
Answer the next question based on the following information for the commercial banking system. All figures are in billions of dollars.
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Refer to the above data. If the banking system currently has exactly no excess reserves, what is the value of the monetary multiplier? |
| | A) | 5 |
| | B) | 8 |
| | C) | 10 |
| | D) | 12 |
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| 10 | |
Early goldsmiths were vulnerable to "runs" or "panics" because they: |
| | A) | could not accurately assay or measure the gold deposits of their customers |
| | B) | kept all their gold deposits at other locations for safety |
| | C) | issued loans by giving borrowers paper money in excess of the deposits they held at the bank |
| | D) | destroyed money when making loans |
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