Question 1

A bank's reserve ratio is 8 percent and the bank has $1,000 in deposits.Its reserves amount to

Accepted Answer

A)  $8.
B)  $80.
C)  $92.
D)  $920.E) A) and C)
F) B) and C)

Question 2

The manager of the bank where you work tells you that your bank has $10 million in excess reserves.She also tells you that the bank has $400 million in deposits and $375 million dollars in loans.Given this information you find that the reserve requirement must be

Accepted Answer

A)  10/400.
B)  25/400.
C)  35/400.
D)  15/400.E) A) and B)
F) A) and C)

Question 3

A bank has a 20 percent reserve requirement,$8,000 in loans,and has loaned out all it can given the reserve requirement.

Accepted Answer

A)  It has $6,400 in deposits.
B)  It has $10,000 in deposits.
C)  It has $9,600 in deposits.
D)  It has $1,600 in deposits.E) A) and D)
F) B) and C)

Question 4

Under a fractional-reserve banking system,banks

Accepted Answer

A)  hold more reserves than deposits.
B)  generally lend out a majority of the funds deposited.
C)  cause the money supply to fall by lending out reserves.
D)  All of the above are correct.E) B) and C)
F) A) and B)

Question 5

The money multiplier equals

Accepted Answer

A)  1/R,where R represents the quantity of reserves in the economy.
B)  1/R,where R represents the reserve ratio for all banks in the economy.
C)  1/(1+R) ,where R represents the quantity of reserves in the economy.
D)  1/(1+R) ,where R represents the reserve ratio for all banks in the economy.E) B) and C)
F) B) and D)

Question 6

On a bank's T-account,which are part of the banks liabilities?

Accepted Answer

A)  both deposits made by its customers and reserves
B)  deposits made by its customers but not reserves
C)  reserves but not deposits made by its customers
D)  neither deposits made by its customers nor reservesE) All of the above
F) C) and D)

Question 7

If the reserve ratio is 6 percent,then $9,000 of additional reserves can create up to

Accepted Answer

A)  $159,000 of new money.
B)  $54,000 of new money.
C)  $150,000 of new money.
D)  $141,000 of new money.E) B) and C)
F) A) and D)

Question 8

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600,it has a

Accepted Answer

A)  $600 increase in excess reserves and no increase in required reserves.
B)  $600 increase in required reserves and no increase in excess reserves.
C)  $510 increase in excess reserves and a $90 increase in required reserves.
D)  $90 increase in excess reserves and a $510 increase in required reserves.E) C) and D)
F) B) and D)

Question 9

A bank has an 8 percent reserve requirement,$10,000 in deposits,and has loaned out all it can given the reserve requirement.

Accepted Answer

A)  It has $80 in reserves and $9,920 in loans.
B)  It has $800 in reserves and $9,200 in loans.
C)  It has $1,250 in reserves and $8,750 in loans.
D)  None of the above is correct.E) All of the above
F) None of the above

Question 10

If the reserve ratio is 8 percent,then a decrease in reserves of $6,000 can cause the money supply to fall by as much as

Accepted Answer

A)  $48,000.
B)  $75,000.
C)  $55,200.
D)  $10,800.E) A) and B)
F) A) and C)

Question 11

A bank loans Greg's Ice Cream $250,000 to remodel a building near campus to use as a new store.On their respective balance sheets,this loan is

Accepted Answer

A)  a liability for the bank and an asset for Greg's Ice Cream.The loan increases the money supply.
B)  a liability for the bank and an asset for Greg's Ice Cream.The loan does not increase the money supply.
C)  an asset for the bank and a liability for Greg's Ice Cream.The loan increases the money supply.
D)  an asset for the bank and a liability for Greg's Ice Cream.The loan does not increase the money supply.E) None of the above
F) B) and D)

Question 12

If the reserve ratio is 15 percent,the money multiplier is

Accepted Answer

A)  7.7.
B)  6.7.
C)  5.7.
D)  15.E) B) and C)
F) None of the above

Question 13

A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150.If customers deposit $50 into the bank,what is the value of the money supply?

Accepted Answer

A)  $50
B)  $100
C)  $150
D)  $200E) All of the above
F) C) and D)

Question 14

If the reserve requirement is 5 percent,a bank desires to hold no excess reserves,and it receives a new deposit of $10,then this bank

Accepted Answer

A)  must increase its required reserves by $10.
B)  will initially see its total reserves increase by $10.50.
C)  will be able to make new loans up to a maximum of $9.50.
D)  All of the above are correct.E) A) and B)
F) A) and C)

Question 15

If the reserve ratio is 5 percent,then $1,000 of additional reserves can create up to

Accepted Answer

A)  $5,500 of new money.
B)  $5,000 of new money.
C)  $4,000 of new money.
D)  None of the above is correct.E) A) and D)
F) All of the above

Question 16

A bank has $8,000 in deposits and $6,000 in loans.It has loaned out all it can given the reserve requirement.It follows that the reserve requirement is

Accepted Answer

A)  2.5 percent.
B)  33.3 percent.
C)  25 percent.
D)  75 percent.E) All of the above
F) A) and D)

Question 17

If the reserve ratio is 5 percent,then $500 of additional reserves can create up to

Accepted Answer

A)  $10,500 of new money.
B)  $10,000 of new money.
C)  $9,500 of new money.
D)  $2,500 of new money.E) B) and C)
F) A) and B)

Question 18

Which of the following is an asset of a bank and a liability for its customers?

Accepted Answer

A)  deposits of its customers and loans to its customers
B)  deposits of its customers but not loans to its customers
C)  loans to its customers but not the deposits of its customers
D)  neither the deposits of its customers nor the loans to its customersE) All of the above
F) A) and B)

Exam 16: The Monetary System: Banks and the Money Supply

A bank has $8,000 in deposits and $6,000 in loans.It has loaned out all it can given the reserve requirement.It follows that the reserve requirement is

Correct Answer
verified

If the reserve ratio is 5 percent,then $500 of additional reserves can create up to

Correct Answer
verified

A bank has a 20 percent reserve requirement,$8,000 in loans,and has loaned out all it can given the reserve requirement.

Correct Answer
verified

A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150.If customers deposit $50 into the bank,what is the value of the money supply?

Correct Answer
verified

If the reserve ratio is 15 percent,the money multiplier is

Correct Answer
verified

On a bank's T-account,which are part of the banks liabilities?

Correct Answer
verified

A bank has an 8 percent reserve requirement,$10,000 in deposits,and has loaned out all it can given the reserve requirement.

Correct Answer
verified

A bank loans Greg's Ice Cream $250,000 to remodel a building near campus to use as a new store.On their respective balance sheets,this loan is

Correct Answer
verified

The money multiplier equals

Correct Answer
verified

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600,it has a

Correct Answer
verified

If the reserve ratio is 5 percent,then $1,000 of additional reserves can create up to

Correct Answer
verified

If the reserve requirement is 5 percent,a bank desires to hold no excess reserves,and it receives a new deposit of $10,then this bank

Correct Answer
verified

The manager of the bank where you work tells you that your bank has $10 million in excess reserves.She also tells you that the bank has $400 million in deposits and $375 million dollars in loans.Given this information you find that the reserve requirement must be

Correct Answer
verified

A bank's reserve ratio is 8 percent and the bank has $1,000 in deposits.Its reserves amount to

Correct Answer
verified

Which of the following is an asset of a bank and a liability for its customers?

Correct Answer
verified

If the reserve ratio is 6 percent,then $9,000 of additional reserves can create up to

Correct Answer
verified

If the reserve ratio is 8 percent,then a decrease in reserves of $6,000 can cause the money supply to fall by as much as

Correct Answer
verified

Under a fractional-reserve banking system,banks

Correct Answer
verified

Exam 16: The Monetary System: Banks and the Money Supply

A bank has $8,000 in deposits and $6,000 in loans.It has loaned out all it can given the reserve requirement.It follows that the reserve requirement is

Correct AnswerverifiedShow Answer

If the reserve ratio is 5 percent,then $500 of additional reserves can create up to

Correct AnswerverifiedShow Answer

A bank has a 20 percent reserve requirement,$8,000 in loans,and has loaned out all it can given the reserve requirement.

Correct AnswerverifiedShow Answer

A bank which must hold 100 percent reserves opens in an economy that had no banks and a currency of $150.If customers deposit $50 into the bank,what is the value of the money supply?

Correct AnswerverifiedShow Answer

If the reserve ratio is 15 percent,the money multiplier is

Correct AnswerverifiedShow Answer

On a bank's T-account,which are part of the banks liabilities?

Correct AnswerverifiedShow Answer

A bank has an 8 percent reserve requirement,$10,000 in deposits,and has loaned out all it can given the reserve requirement.

Correct AnswerverifiedShow Answer

A bank loans Greg's Ice Cream $250,000 to remodel a building near campus to use as a new store.On their respective balance sheets,this loan is

Correct AnswerverifiedShow Answer

The money multiplier equals

Correct AnswerverifiedShow Answer

If a bank that desires to hold no excess reserves and has just enough reserves to meet the required reserve ratio of 15 percent receives a deposit of $600,it has a

Correct AnswerverifiedShow Answer

If the reserve ratio is 5 percent,then $1,000 of additional reserves can create up to

Correct AnswerverifiedShow Answer

If the reserve requirement is 5 percent,a bank desires to hold no excess reserves,and it receives a new deposit of $10,then this bank

Correct AnswerverifiedShow Answer

The manager of the bank where you work tells you that your bank has $10 million in excess reserves.She also tells you that the bank has $400 million in deposits and $375 million dollars in loans.Given this information you find that the reserve requirement must be

Correct AnswerverifiedShow Answer

A bank's reserve ratio is 8 percent and the bank has $1,000 in deposits.Its reserves amount to

Correct AnswerverifiedShow Answer

Which of the following is an asset of a bank and a liability for its customers?

Correct AnswerverifiedShow Answer

If the reserve ratio is 6 percent,then $9,000 of additional reserves can create up to

Correct AnswerverifiedShow Answer

If the reserve ratio is 8 percent,then a decrease in reserves of $6,000 can cause the money supply to fall by as much as

Correct AnswerverifiedShow Answer

Under a fractional-reserve banking system,banks

Correct AnswerverifiedShow Answer

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