chapter 35

if a bank has actual reserves of $110,000, checkable deposits of $100,000 and a reserve ratio of 20%, its excess reserves are ________

90000

if a bank has actual reserves of $110,000, checkable deposits of $100,000, and a reserve ratio of 20%, its excess reserves are _______

90000

which of the following are the two basic functions of commercial banks?

accepting deposits making loans

a withdrawal of cash from a bank that does not put the banks reserves below the level of required reserves will ______

reduce the banks checkable deposits but not change the total money supply

in the US, runs on banks are prevented because

the federal deposit insurance corporation guarantees bank accounts

if johnson bank has actual reserves of $200,000 in demand deppostis with a reserve ratio is 20%, what is the amount of excess reserves

$180,000 required reserves are an amount of funds equal to a specified percentage of a banks own deposits in this case 10% or 20000. excess reserves are the difference between actual reserves of $200000, minus required reserves of $20000 in this case $180,000

what are the two significant characteristics of fractional reserve banking?

-banks operating on the basis of fractional reserves are vulnerable to "panics" or "runs" -banks can create money through lending

which are true statements about the main purpose of required reserves? - - -to prevent banks from making too much profit from lending -to protect depositors from losing money due to bank runs

-to help the economy avoid business fluctuations -to help the fed control the lending ability of commercial banks

if the reserve ration is 10% and a bank accepts $50000 in demand deposits from the public, then it would have to keep $_________ as reserves

5000

owhen a bank deposits its reserves with the federal reserve bank the reserves are a ____ to the bank and ______ to the federal reserve bank

asset liabilities

money deposited as checkable deposits at a commercial bank is a ____ to the epositor and a _______ to the bank

asset liability

reserves deposited by a commercial bank in to the federal reserve bank are _________ to the commercial bank and ________ to the federal reserve bank

assets; liabilities

securing a state or national charter is one step in the process of creating a commercial ______

bank

abe receives a check from bea fro fixing beas car. beas bank is bank b, abe deposits the check into his bank, bank a. select all the statemets that correct describe the check-clearing process - - -total reserves in the banking system increase -bank a increases its reserves at the federal reserve bank by more than the amount of the check

bank a increases abes checkable deposits by the amount of the check total reserves in the banking system remain unchanged

who can create money through landing?

banks

the federal funds rate is the interest rate that

banks charge each other to borrow money overnight

checkable deposits are commercial bank ______ that it promises to pay "on demand"

debts

when a deposited check is drawn against another bank, the collection of that check will __________ the reserves and the checkable deposits of the bank from which it was drawn

decrease

removing the incentive to withdraw one's deposit before anyone else can is the purpose of ________

deposit insurance

a single commercial bank can lend only an amount equal to its _______ reserves

excess

true of false: banks create money solely by selling US governmetn bonds to the public

false

true or false: banks operating on the basis of fractional reserves are not vulnerable to panics or runs

false

reserve requirements are less than 100%, which means they are ________

fractional

where are places that a bank can keep its reserves? - in the form of bitcoin on the internet - in the vault of its competitors - in its own vault - at the vault of the federal reserve bank in its district

in its own vault at the vault of the federal reserve bank in tis district

the fraction of deposits that abank is required by law to hold and not lend out is called its

required reserves or reserve ratio

what term refers to the amount of reserves that a commercial bank must keep that is a percentage of the banks checkable deposit liabilities?

reserve ratio

an increase in a bank's checkable deposits due to a cash deposit will have what effect on the total money supply?

the total money supply will not change

a banks excess reserves equals the banks _____ reserves minus its required reserves

total

true or false: banks keep a portion of their reserves in their own vaults

true