Question 1

Reserve requirements for checking accounts are ____ those on time deposits.

Accepted Answer

A)  higher than
B)  lower than
C)  the same asD) B) and C)
E) A) and C)

Question 2

Which statement is false?

Accepted Answer

A)  Time deposits are subject to higher reserve requirements than checking deposits.
B)  Treasury bills and notes are generally considered part of a bank's secondary reserves.
C)  Large banks are subject to a 10 percent reserve requirement on nearly all of their checking deposits.
D)  None of the statements are false.E) B) and C)
F) All of the above

Question 3

To create deposits for clients to which it makes loans,a bank typically uses its

Accepted Answer

A)  liabilities.
B)  required reserves.
C)  excess reserves.
D)  federal reserves.E) A) and B)
F) None of the above

Question 4

Suppose the required reserve ratio is 10% and a commercial bank has $2 million in checkable deposits appearing on the liability side of its balance sheet.How much vault cash does the bank have?

Accepted Answer

A)  $2 million
B)  $20,000
C)  $200,000
D)  Vault cash cannot be determined by the information given.E) B) and C)
F) A) and C)

Question 5

If the Fed sells securities on the open market,bond prices will tend to ____ and interest rates will tend to ____.

Accepted Answer

The answer of If the Fed sells securities on the...

Question 6

A commercial bank can add to its actual reserves by

Accepted Answer

A)  lending money to bank customers.
B)  buying bonds from the public.
C)  buying bonds from a Federal Reserve Bank.
D)  borrowing from a Federal Reserve Bank.E) All of the above
F) B) and D)

Question 7

If the Fed buys $30 million in government securities,paying for them with new deposit balances at the Fed,the money supply will end up

Accepted Answer

A)  decreasing by $30 million.
B)  decreasing by much more than $30 million.
C)  increasing by $30 million.
D)  increasing by much more than $30 million.E) A) and B)
F) None of the above

Question 8

Statement I: Very large banks have to hold 10% of their demand deposits over $55.2 million on reserve.
Statement II: A bank that does not hold sufficient reserves can borrow reserves from another bank that has some excess reserves,or it can borrow at the discount window of its Federal Reserve District Bank.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) A) and B)
F) B) and C)

Question 9

The Glass-Steagall Act

Accepted Answer

A)  was created in 1933 to divide commercial banking from investment banking.
B)  allowed banks to become more diverse in the investments they were allowed to make.
C)  made U.S.banks similar to the "universal banks" of continental Europe.
D)  created conflicts of interest between commercial banks and investment banks.E) C) and D)
F) A) and B)

Question 10

Who does not sit on the Federal Open Market Committee?

Accepted Answer

A)  The president of the New York Federal District Bank
B)  The Chairman of the Federal Reserve Board
C)  The Secretary of the Treasury
D)  The members of the Federal Reserve BoardE) None of the above
F) B) and D)

Question 11

Approximately how much in reserves would a bank having $10 billion in demand deposits have to hold?

Accepted Answer

The answer of Approximately how much in reserves would a...

Question 12

Which statement is true?

Accepted Answer

A)  Banks get a significant part of their total revenue from interest on their primary reserves.
B)  Banks try to carry as much in excess reserves as they possibly can.
C)  Only a small fraction of the nation's banks are subject to the reserve requirements of the Federal Reserve.
D)  The banks have received interest on their reserves since October,2008.E) A) and D)
F) None of the above

Question 13

If Suntrust Banks have demand deposits of $10 billion,actual reserves of $2 billion,and the reserve requirement is 18%,the bank's excess reserves are

Accepted Answer

A)  $180 million.
B)  $200 million.
C)  $360 million.
D)  $400 million.
E)  $1 billion.F) A) and B)
G) A) and C)

Question 14

When the Fed buys United States bonds,

Accepted Answer

A)  excess reserves in commercial banks are increased immediately.
B)  the banking system will decrease the number of loans that are made.
C)  total bank reserves are decreased.
D)  the value of the money multiplier slowly declines to a new stationary level.
E)  the money supply will eventually decline as banks are forced to call loans due to meet reserve requirements.F) B) and D)
G) A) and D)

Question 15

The Banking Acts of 1980 and 1999 contributed to the financial crisis in 2008 by

Accepted Answer

A)  increasing the number of small banks.
B)  encouraging the creation of more financial institutions that were "to big to fail".
C)  restricting the trading of toxic assets.
D)  creation of a large number of bankrupted financial institutions.E) All of the above
F) B) and C)

Question 16

If a bank has no excess reserves,the reserve requirement is 25%,and receives a $100,000 deposit,the bank can lend out

Accepted Answer

A)  $100,000.
B)  $75,000.
C)  $50,000.
D)  $0.E) A) and D)
F) C) and D)

Question 17

The reserve ratio is equal to required reserves divided by __________.

Accepted Answer

total deposits (depo...

Question 18

Assume that a bank has $2 million in reserves and checkable deposits of $10 million and the required reserve ratio on checkable deposits is 20%.The maximum amount of new loans this bank can make is

Accepted Answer

A)  $500,000.
B)  $1 million.
C)  $200,000.
D)  zero.
E)  $700,000.F) B) and E)
G) B) and D)

Question 19

Secondary reserves consist of (1)________; (2)________; (3)_________;and (4)______.

Accepted Answer

Treasury bills;es;ce...

Question 20

If a bank has negative excess reserves,then its ______ are greater than its _____.

Accepted Answer

required r...

Exam 14: The Federal Reserve and Monetary Policy

When the Fed buys United States bonds,

Correct Answer
verified

Suppose the required reserve ratio is 10% and a commercial bank has $2 million in checkable deposits appearing on the liability side of its balance sheet.How much vault cash does the bank have?

Correct Answer
verified

If Suntrust Banks have demand deposits of $10 billion,actual reserves of $2 billion,and the reserve requirement is 18%,the bank's excess reserves are

Correct Answer
verified

Which statement is false?

Correct Answer
verified

The Banking Acts of 1980 and 1999 contributed to the financial crisis in 2008 by

Correct Answer
verified

The Glass-Steagall Act

Correct Answer
verified

Which statement is true?

Correct Answer
verified

A commercial bank can add to its actual reserves by

Correct Answer
verified

The reserve ratio is equal to required reserves divided by __________.

Correct Answer
verified
total deposits (depo...
View Answer

Approximately how much in reserves would a bank having $10 billion in demand deposits have to hold?

Correct Answer
verified

Assume that a bank has $2 million in reserves and checkable deposits of $10 million and the required reserve ratio on checkable deposits is 20%.The maximum amount of new loans this bank can make is

Correct Answer
verified

If a bank has no excess reserves,the reserve requirement is 25%,and receives a $100,000 deposit,the bank can lend out

Correct Answer
verified

Reserve requirements for checking accounts are ____ those on time deposits.

Correct Answer
verified

Correct Answer
verified

If the Fed sells securities on the open market,bond prices will tend to and interest rates will tend to .

Correct Answer
verified

If the Fed buys $30 million in government securities,paying for them with new deposit balances at the Fed,the money supply will end up

Correct Answer
verified

If a bank has negative excess reserves,then its __ are greater than its _.

Correct Answer
verified
required r...
View Answer

To create deposits for clients to which it makes loans,a bank typically uses its

Correct Answer
verified

Who does not sit on the Federal Open Market Committee?

Correct Answer
verified

Secondary reserves consist of (1)____; (2); (3)_;and (4)__.

Correct Answer
verified
Treasury bills;es;ce...
View Answer

Exam 14: The Federal Reserve and Monetary Policy

When the Fed buys United States bonds,

Correct AnswerverifiedShow Answer

Suppose the required reserve ratio is 10% and a commercial bank has $2 million in checkable deposits appearing on the liability side of its balance sheet.How much vault cash does the bank have?

Correct AnswerverifiedShow Answer

If Suntrust Banks have demand deposits of $10 billion,actual reserves of $2 billion,and the reserve requirement is 18%,the bank's excess reserves are

Correct AnswerverifiedShow Answer

Which statement is false?

Correct AnswerverifiedShow Answer

The Banking Acts of 1980 and 1999 contributed to the financial crisis in 2008 by

Correct AnswerverifiedShow Answer

The Glass-Steagall Act

Correct AnswerverifiedShow Answer

Which statement is true?

Correct AnswerverifiedShow Answer

A commercial bank can add to its actual reserves by

Correct AnswerverifiedShow Answer

The reserve ratio is equal to required reserves divided by __________.

Correct Answerverifiedtotal deposits (depo...View AnswerShow Answer

Approximately how much in reserves would a bank having $10 billion in demand deposits have to hold?

Correct AnswerverifiedShow Answer

Assume that a bank has $2 million in reserves and checkable deposits of $10 million and the required reserve ratio on checkable deposits is 20%.The maximum amount of new loans this bank can make is

Correct AnswerverifiedShow Answer

If a bank has no excess reserves,the reserve requirement is 25%,and receives a $100,000 deposit,the bank can lend out

Correct AnswerverifiedShow Answer

Reserve requirements for checking accounts are ____ those on time deposits.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the Fed sells securities on the open market,bond prices will tend to ____ and interest rates will tend to ____.

Correct AnswerverifiedShow Answer

If the Fed buys $30 million in government securities,paying for them with new deposit balances at the Fed,the money supply will end up

Correct AnswerverifiedShow Answer

If a bank has negative excess reserves,then its ______ are greater than its _____.

Correct Answerverifiedrequired r...View AnswerShow Answer

To create deposits for clients to which it makes loans,a bank typically uses its

Correct AnswerverifiedShow Answer

Who does not sit on the Federal Open Market Committee?

Correct AnswerverifiedShow Answer

Secondary reserves consist of (1)________; (2)________; (3)_________;and (4)______.

Correct AnswerverifiedTreasury bills;es;ce...View AnswerShow Answer

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total deposits (depo...
View Answer

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verified

If the Fed sells securities on the open market,bond prices will tend to and interest rates will tend to .

Correct Answer
verified

Correct Answer
verified

If a bank has negative excess reserves,then its __ are greater than its _.

Correct Answer
verified
required r...
View Answer

Correct Answer
verified

Correct Answer
verified

Secondary reserves consist of (1)____; (2); (3)_;and (4)__.

Correct Answer
verified
Treasury bills;es;ce...
View Answer