Question 1

If the reserve ratio is 10 percent,$1,000 of additional reserves can create

Accepted Answer

A)  $11,000 of new money.
B)  $10,000 of new money.
C)  $9,000 of new money
D)  None of the above is correct.E) A) and D)
F) A) and C)

Question 2

Suppose that banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10%.If you deposit $3,000 into First Hawkeye Bank,

Accepted Answer

A)  Hawkeye's required reserves increase by $300.
B)  Hawkeye will be able to lend out $2,700.
C)  Hawkeye's assets and liabilities will both increase by $3,000.
D)  All of the above are correct.E) A) and B)
F) B) and D)

Question 3

Consider four survivors on an island.
 
-Which of the following pairs have a double-coincidence of wants with each other?

Accepted Answer

A)  Rupert with Amber, and Rob with Tom
B)  Amber with Tom
C)  Rupert with Rob
D)  None of the above have a double-coincidence of wants.E) C) and D)
F) B) and D)

Question 4

Money market mutual funds are included in

Accepted Answer

A)  M1 but not M2.
B)  M1 and M2.
C)  M2 but not M1.
D)  neither M1 or M2.E) All of the above
F) C) and D)

Question 5

The Board of Governors

Accepted Answer

A)  is currently chaired by Paul Volcker.
B)  are appointed by the president and confirmed by the Senate.
C)  has twelve members.
D)  All of the above are correct.E) B) and C)
F) A) and B)

Question 6

Suppose that in a country people had no access to banks but used currency.The creation of a fractional reserve banking system with a reserve ratio of less than 100% would cause the money supply to

Accepted Answer

A)  increase.The central bank could reduce the size of this increase by buying bonds.
B)  increase.The central bank could reduce the size of this increase by selling bonds.
C)  decrease.The central bank could reduce the size of this decrease by buying bonds.
D)  decrease.The central bank could reduce the size of this decrease by selling bonds.E) A) and B)
F) B) and D)

Question 7

On a bank's T-account,

Accepted Answer

A)  both deposits and reserves are assets.
B)  both deposits and reserves are liabilities.
C)  deposits are assets, reserves are liabilities.
D)  reserves are assets, deposits are liabilities.E) All of the above
F) A) and C)

Question 8

The 12 regional Federal Reserve Banks

Accepted Answer

A)  are not allowed to make loans to banks in their districts.
B)  regulate banks in their districts.
C)  have more voting members on the FOMC than does the Board of Governors.
D)  are each headed by a member of the Board of Governors.E) A) and B)
F) A) and C)

Question 9

You get money for babysitting the neighbors' children.This best illustrates which function of money?

Accepted Answer

A)  medium of exchange
B)  unit of account
C)  store of value
D)  liquidityE) None of the above
F) All of the above

Question 10

Use the balance sheet for the following questions.
Table 29-2
 
-Refer to Table 29-2.The reserve ratio is

Accepted Answer

A)  0 percent.
B)  20 percent.
C)  80 percent.
D)  100 percent.E) A) and B)
F) All of the above

Question 11

Suppose that banks desire to hold no excess reserves.If the reserve ratio is 5 percent and a bank receives a new deposit of $400,it

Accepted Answer

A)  must increase required reserves by $380.
B)  will initially see reserves increase by $380.
C)  will be able to use this deposit to make new loans.
D)  None of the above is correct.E) B) and D)
F) A) and D)

Question 12

Table 29-6
 
-Refer to Table 29-6.If the reserve requirement is 10% than People's bank

Accepted Answer

A)  has excess reserves of over $2 million dollars.
B)  has excess reserves of under $2 million dollars.
C)  currently needs to increase its reserves by less than $2 million to meet the reserve requirement.
D)  currently needs to increase its reserves by more than $2 million to meet the reserve requirement.E) B) and C)
F) C) and D)

Question 13

Gary's wealth is $1 million.Economists would say that Gary has $1 million worth of money.

Accepted Answer

A) True 
 B)False

Question 14

Tazian Banking Statistics
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi. The local unit of currency is the Taz. Aggregate banking statistics show that collectively the banks of Tazi hold 300 million Tazes of required reserves, 75 million Tazes of excess reserves, have issued 7,500 million Tazes of deposits, and hold 225 million Tazes of Tazian Treasury bonds. Tazians prefer to use only demand deposits and so all currency is on deposit at the bank.
-Refer to Tazian Banking Statistics.Assume that banks desire to continue holding the same ratio of excess reserves to deposits.What is the required reserve ratio and the reserve ratio for Tazian Banks?

Accepted Answer

A)  5%, 8%
B)  4%, 8%
C)  4%, 5%
D)  None of the above is correct.E) B) and C)
F) None of the above

Question 15

Table 29-4
 
-Refer to Table 29-4.Assume that all other banks hold only the required 5 percent of deposits as reserves and that people hold only deposits and no currency.If the Bank of Tampa decides to hold exactly 5% reserves,by how much would the economy's money supply increase?

Accepted Answer

A)  $500
B)  $1,000
C)  $1,500
D)  $2,000E) A) and B)
F) A) and C)

Question 16

Meditorian Banking Statistics
The monetary policy of Meditor is determined by the Meditorian Central Bank. The local currency is the medit. Meditorian banks collectively hold 100 million medits of required reserves, 25 million medits of excess reserves, 250 million medits of Meditorian Treasury Bonds, and their customers hold 1,000 million medits of deposits. Meditorians prefer to use only demand deposits and so all currency is on deposit at the bank.
-Refer to Meditorian Central Banking.Assuming the only other thing Meditorian banks have on their balance sheets is loans,what is the value of existing loans made by Meditorian banks?

Accepted Answer

A)  625 million medits
B)  875 million medits
C)  1,125 million medits
D)  None of the above is correct.E) A) and D)
F) B) and C)

Question 17

If the reserve ratio is 10 percent,$1,000 of additional reserves can create

Accepted Answer

A)  $100 of new money.
B)  $1,000 of new money.
C)  $10,000 of new money.
D)  None of the above is correct.E) A) and B)
F) None of the above

Question 18

To decrease the money supply,the Fed could

Accepted Answer

A)  sell government bonds.
B)  increase the discount rate.
C)  increase the reserve requirement.
D)  All of the above are correct.E) None of the above
F) A) and B)

Question 19

If the reserve ratio is 100 percent,depositing $500 of paper money in a bank

Accepted Answer

A)  will eventually increase the money supply by $500.
B)  leave the size of the money supply unchanged.
C)  will eventually decrease the size of the money supply by $500.
D)  None of the above is correct.E) A) and B)
F) B) and C)

Question 20

Suppose that the reserve ratio is 10 percent and that a bank has $2,000 in deposits.Its reserves are

Accepted Answer

A)  $20.
B)  $200.
C)  $1,880.
D)  $1,800.E) B) and D)
F) A) and B)

Exam 29: The Monetary System

If the reserve ratio is 10 percent,$1,000 of additional reserves can create

Correct Answer
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Correct Answer
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Suppose that the reserve ratio is 10 percent and that a bank has $2,000 in deposits.Its reserves are

Correct Answer
verified

On a bank's T-account,

Correct Answer
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Table 29-6 -Refer to Table 29-6.If the reserve requirement is 10% than People's bank

Correct Answer
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The 12 regional Federal Reserve Banks

Correct Answer
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Gary's wealth is $1 million.Economists would say that Gary has $1 million worth of money.

Correct Answer
verified

If the reserve ratio is 100 percent,depositing $500 of paper money in a bank

Correct Answer
verified

To decrease the money supply,the Fed could

Correct Answer
verified

Suppose that banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10%.If you deposit $3,000 into First Hawkeye Bank,

Correct Answer
verified

Money market mutual funds are included in

Correct Answer
verified

If the reserve ratio is 10 percent,$1,000 of additional reserves can create

Correct Answer
verified

The Board of Governors

Correct Answer
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Use the balance sheet for the following questions. Table 29-2 -Refer to Table 29-2.The reserve ratio is

Correct Answer
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Correct Answer
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Suppose that banks desire to hold no excess reserves.If the reserve ratio is 5 percent and a bank receives a new deposit of $400,it

Correct Answer
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Consider four survivors on an island. -Which of the following pairs have a double-coincidence of wants with each other?

Correct Answer
verified

Suppose that in a country people had no access to banks but used currency.The creation of a fractional reserve banking system with a reserve ratio of less than 100% would cause the money supply to

Correct Answer
verified

Table 29-4 -Refer to Table 29-4.Assume that all other banks hold only the required 5 percent of deposits as reserves and that people hold only deposits and no currency.If the Bank of Tampa decides to hold exactly 5% reserves,by how much would the economy's money supply increase?

Correct Answer
verified

You get money for babysitting the neighbors' children.This best illustrates which function of money?

Correct Answer
verified

Exam 29: The Monetary System

If the reserve ratio is 10 percent,$1,000 of additional reserves can create

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that the reserve ratio is 10 percent and that a bank has $2,000 in deposits.Its reserves are

Correct AnswerverifiedShow Answer

On a bank's T-account,

Correct AnswerverifiedShow Answer

Table 29-6 -Refer to Table 29-6.If the reserve requirement is 10% than People's bank

Correct AnswerverifiedShow Answer

The 12 regional Federal Reserve Banks

Correct AnswerverifiedShow Answer

Gary's wealth is $1 million.Economists would say that Gary has $1 million worth of money.

Correct AnswerverifiedShow Answer

If the reserve ratio is 100 percent,depositing $500 of paper money in a bank

Correct AnswerverifiedShow Answer

To decrease the money supply,the Fed could

Correct AnswerverifiedShow Answer

Suppose that banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10%.If you deposit $3,000 into First Hawkeye Bank,

Correct AnswerverifiedShow Answer

Money market mutual funds are included in

Correct AnswerverifiedShow Answer

If the reserve ratio is 10 percent,$1,000 of additional reserves can create

Correct AnswerverifiedShow Answer

The Board of Governors

Correct AnswerverifiedShow Answer

Use the balance sheet for the following questions. Table 29-2 -Refer to Table 29-2.The reserve ratio is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that banks desire to hold no excess reserves.If the reserve ratio is 5 percent and a bank receives a new deposit of $400,it

Correct AnswerverifiedShow Answer

Consider four survivors on an island. -Which of the following pairs have a double-coincidence of wants with each other?

Correct AnswerverifiedShow Answer

Suppose that in a country people had no access to banks but used currency.The creation of a fractional reserve banking system with a reserve ratio of less than 100% would cause the money supply to

Correct AnswerverifiedShow Answer

Table 29-4 -Refer to Table 29-4.Assume that all other banks hold only the required 5 percent of deposits as reserves and that people hold only deposits and no currency.If the Bank of Tampa decides to hold exactly 5% reserves,by how much would the economy's money supply increase?

Correct AnswerverifiedShow Answer

You get money for babysitting the neighbors' children.This best illustrates which function of money?

Correct AnswerverifiedShow Answer

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