money and banking

Assume that Aisha deposits $5,000 into her bank and the reserve ratio is 10%. If her bank loans out $4,500 from this amount to another customer, what would be the amount of excess reserves that remain?

0

Within the Fed which of the following is responsible for the purchase and sale of government securities?

Federal Open Market Committee

Within the Fed which of the following is responsible for check clearing activities?

Federal Reserve District Banks

Within the Fed which of the following is responsible for issuing Federal Reserve Notes?

Federal Reserve District Banks

Which of the following types of government securities have 5 year maturities?

treasury notes

The deposit expansion multiplier is a potential or maximum multiplier while the expenditure multiplier was an actual multiplier.

true

The members of the Fed's Board of Governors are appointed by the U.S. President and approved by the U.S. Senate for a term of 14 years.

true

If Jason deposits $2,500 into his bank and the reserve ratio is 11%, what would be the amount of excess reserves that are immediately created?

$2,225

If Evan deposits $500 into his bank and the reserve ratio is 9%, what would be the amount of excess reserves that are immediately created?

$455

If Sean deposits $550 into his bank and the reserve ratio is 12%, what would be the amount of required reserves that are immediately created?

$66

If Jason deposits $800 into his bank and the reserve ratio is 10%, what would be the amount of required reserves that are immediately created?

$80

If Melanie deposits $1,200 into her bank and the reserve ratio is 10%, what would be the amount of required reserves and excess reserves that are immediately created?

Required reserves would equal $120 and excess reserves would equal $1,080.

If Scott deposits $400 into his bank and the reserve ratio is 12%, what would be the amount of required reserves and excess reserves that are immediately created?

Required reserves would equal $48 and excess reserves would equal $352.

In a fractional reserve system, reserves can be held as either vault cash in the bank itself or deposits at the Fed.

TRUE

Within the Fed which of the following is responsible for fiscal policy actions?

none of the above

Which of the following are functions of money?

store of value unit of measurement medium of exchange Answer: ALL OF THE ABOVE

If the reserve ratio is 9%, what would deposit expansion multiplier equal?

11.1

If the reserve ratio was 8%, what would deposit expansion multiplier equal?

12.5

Assume that Susan deposits $3,000 into her bank and the reserve ratio is 8%. If her bank loans out $1,200 from this amount to another customer, what would be the amount of excess reserves that remain?

1560

If the reserve ratio is 10% and someone deposits an additional $20,000, what will be the maximum increase in total deposits over time?

200,000

If the reserve ratio was 15% and someone deposited an additional $40,000, what would be the maximum increase in total deposits over time?

266,667

If the price of a one year T-Bill is $960 and the value at maturity is $1,000, what would be the yield (interest rate)?

4.2%

If the price of a one year T-Bill is $9,550 and the value at maturity is $10,000, what would be the yield (interest rate)?

4.7%

Assume that Aisha deposits $10,000 into her bank and the reserve ratio is 12%. If her bank loans out $4,500 from this amount to another customer, what would be the amount of excess reserves that remain?

4300

If the price of a one year T-Bill is $2,850 and the value at maturity is $3,000, what would be the yield (interest rate)?

5.3%

Assume that Cheryl deposits $1,000 into her bank and the reserve ratio is 10%. If her bank loans out $400 from this amount to another customer, what would be the amount of excess reserves that remain?

500

If the reserve ratio was 9% and someone deposited an additional $50,000, what would be the maximum increase in total deposits over time?

555,556

If the reserve ratio is 12%, what would deposit expansion multiplier equal?

8.33

Within the Fed which of the following is responsible for establishing the regulations for depository institutions?

Board of Governors

In a fractional reserve system, banks are required to hold 100% of their deposits as reserves.

FALSE

Which of the following are monetary policy tools?

changing the reserve requirements changing the discount rate buying or selling government securities ANSWER: ALL OF THE ABOVE

Which of the following is a complete listing of the components of M1?

currency, checking account balances, other checkable deposits, travelers checks

Which of the following is a complete listing of the components of M2?

currency, checking accounts, other checkable deposits, travelers checks, savings accounts, small time deposits, retail MMMFs

Which of the following monetary policy actions would increase the money supply?

decreasing reserve ratios

The Fed's actions are under the direct control of the federal government.

false

The fed funds rate is the interest rate that the Fed charges banks to borrow money from the Fed and the discount rate is the interest rate that banks charge other banks to borrow money.

false; correct answer: The reverse of this statement is true. The discount rate is the interest rate that the Fed charges banks to borrow money from the Fed and the fed funds rate is the interest rate that banks charge other banks to borrow money.