Econ Practice Quiz 11

If the reserve ratio is 5 percent, then $500 of additional reserves would ultimately generate

$10,000 of money.

Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 8 percent, and excess reserves amount to $5 billion. What is the level of deposits?

$4,937.5 billion

How much can the money supply increase from an initial deposit of $200 if the reserve ratio is 10%?

2,000

A bank's reserve ratio is 5 percent and the bank has $1,000 in deposits. The money multiplier in this case is equal to

20

The manager of the bank where you work tells you that your bank has $6 million in excess reserves. She also tells you that the bank has $400 million in deposits and $362 million in loans. Given this information you find that the reserve requirement must be

8 percent.

Which of the following is included in both M1 and M2?

Currency, demand deposits, and other checkable deposits

In a system of 100-percent-reserve banking,

banks do not influence the supply of money

The measure of the money stock called M1 includes

wealth held by people in their checking accounts.

Suppose the banking system currently has $300 billion in reserves, the reserve requirement is 5 percent, and excess reserves are $30 billion. What is the level of loans?

$5,100 billion

If a bank with a required reserve ratio of 15 percent receives a deposit of $600, it now has a

$510 increase in excess reserves and a $90 increase in required reserves.

How much can the money supply increase from an initial deposit of $200 if the reserve ratio is 2%?

10,000

A bank's reserve ratio is 1 percent and the bank has $1,000 in deposits. The money multiplier in this case is equal to

100

A bank has $10,000 in deposits and $8,000 in loans. It has loaned out all it can, given the reserve requirement. It follows that the reserve requirement is ___ %.

20%

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

25 percent

A bank's deposits are $5,000. If the bank's reserve ratio is exactly 5% then, its reserves amount to

250

A bank's deposits are $5,000. If the bank's reserve ratio is exactly 1% then, its reserves amount to

50

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

It has $800 in reserves and $9,200 in loans.

John and Jane decide to go on a vacation. As a result, they withdraw $2,500 from their savings account to purchase $2,500 worth of traveler's checks. As a result of these changes,

M1 increases by $2,500 and M2 stays the same.

If the reserve requirement is 10 percent, a bank desires to hold no excess reserves, and it receives a new deposit of $500, it

must increase required reserves by $50.

You saved $500 in currency in your piggy bank to purchase a new laptop. The $500 you kept in your piggy bank illustrates money's function as a _______. The laptop's price is posted as $500. The $500 price illustrates money's function as a _____. You use the $500 to purchase the laptop. This transaction illustrates money's function as a ______.

store of value, unit of account, medium of exchange