WK 4 CH 16 QUIZ
A bank has $50 in reserves, $30 in excess reserves and $70 in deposits. Because of this, it has how much M1 money?
$ 70.00
In the special case of the 100-percent reserve banking the money multiplier is
1 and banks do not create money.
Metropolis National Bank is currently holding 2% of its deposits as excess reserves.
10 percent reserve requirement
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 dollars in loans. Given this information you find that the reserve requirement must be
32/400
A bank's reserve ratio is 5 percent and the bank has $2,280 in reserve. Its deposits amount to
45,600
A bank has an 8 percent reserve requirement, $10,000 in deposits, and has loaned out all it can given the reserve requirement.
800 in reserves and 9,200 in loans
Which of the following is correct?
A bank's deposits at the Federal Reserve counts as part of the bank's reserves. The Federal Reserve pays interest on these deposits.
In a 100-percent-reserve banking system, if people decided to decrease the amount of currency they held by increasing the amount they held in checkable deposits, then
M1 would not change
According to the article "Why Gold?', silver may be used as money. One problem with using silver as money is that
Silver tarnishes over time
Which of the following is correct?
The amount of money in the economy depends in part on the behavior of banks.
Which of the following best illustrates the concept of a store of value?
You keep 6 oz of gold in your Sade deposit box at the bank for emergencies
When a bank fails to meet the reserve requirement by the end of its operating hours, it can meet the requirement by
borrowing overnight from other banks
Which of the following items is not included in the most narrow definition of money, M1?
certificates of deposit
Which of the following can the Fed do to change the money supply?
change reserves or the ratio
M1 includes
currency, demand deposits, travelers checks
Refer to Table 29-6. From the table, it follows that the Bank of Pleasantville operates in a Assets-- Reserves: 3,000. Loans: 47,000 Liabilities-- Deposits:50,000
fractional-reserve banking system, since its reserves are less than its deposits.
Fiat money
has no intrinsic value
When the Fed conducts open-market purchases
it buys Treasury securities, which increases the money supply.
Bank Is insolvent when
its capital (ownder's equity) is negative
Banks create money when they
make loans
Suppose banks decide to hold fewer excess reserves relative to deposits. Other things the same, this action will cause the
money supply to rise. To reduce the impact of this the Fed could sell Treasury bonds.
M1 includes
other checkable deposits
Banks
pay depositors interest
The federal reserve
serves as a lender of last resort
The measure of the money stock called M1 includes
wealth held by people in their checking accounts.
