Chapter 14: Money, Banking, and the Federal Reserve System - LearningCurve

Suppose that the required reserve ratio is 10 percent. If a bank has $300 in cash in its vault, $4,000 in loans to customers, $10,000 in checkable deposits, and $800 in deposits at the Federal Reserve, then the bank's required reserves are:

$1,000

A bank has $300 in cash in its vault, $4,000 in loans to customers, and $800 in deposits at the Federal Reserve. The bank's reserves are:

$1,100

Suppose that the required reserve ratio is 10 percent. A bank has $300 in cash in its vault, $4,000 in loans to customers, $0 in excess reserves, and $800 in deposits at the Federal Reserve. The bank's checkable deposits are:

$11,000

The People's Bank has $1 million in loans, $2 million in deposits, and $300,000 in reserves. If the reserve ratio set by the Federal Reserve is 0.2, then _____ of the bank's deposits must be held as reserves.

$400,000

If a bank has $100 in cash in its vault, $2,000 in loans to customers, and $400 in deposits at the Federal Reserve, then the bank's reserves are:

$500

If Emily deposits $1,000 in Big Bank, then the bank's reserves increase by _____ dollars and the bank's deposits increase by _____ dollars.

1,000; 1,000

If a bank has $1,000 in demand deposits and the reserve ratio is 25 percent, then it must hold reserves of _____ dollars.

250

If a bank has $5,000 in required reserves and the reserve requirement is 10 percent, then demand deposits must be _____ dollars.

50,000

_____ is an overall measure of the money supply.

A monetary aggregate

_____ would be a good asset to serve as money because they would be a good store of value.

Diamonds

_____ is/are a bank's reserves over and above its required reserves.

Excess reserves

_____ is the measure of the narrowest definition of money.

M1

If Joe transfers $1,000 from his savings account to his checking account, then:

M1 will increase by $1,000.

If Joe puts $100 in cash in his checking account, then what will happen to M1?

M1 will not change.

Jim deposits a $400 check in College Bank. The reserve requirement is 20 percent. As a result of the deposit, which describes the bank's balance sheet after the deposit?

Reserves increase by $400, and demand deposits increase by $400.

Money eliminates the need for:

a "double coincidence of wants" between trading partners.

Without a medium of exchange, an economy must rely on _____ in order to trade.

barter

Banks _____ the money supply because they _____ currency from circulation and place it in their vaults or deposit it at the Federal Reserve.

can decrease; can remove some

The excess of a bank's assets over its liabilities is the bank's:

capital.

The narrowest definition of money includes:

currency in circulation, checkable bank deposits, and traveler's checks.

When the Federal Reserve increases the reserve requirement, the money supply will MOST likely:

decrease

Bank reserves _____ the outstanding loans that the bank has made to borrowers.

do not include

A ten-dollar bill issued by the U.S. Treasury in 2015 is:

fiat money.

Money in Charlotte's checking account is:

fiat money.

A(n) _____ is a private investment partnership open only to wealthy individuals and institutions.

hedge fund

If the Federal Reserve lowers the reserve requirement, then the money supply will MOST likely:

increase

Bank regulation is helpful in reducing bank runs because bank regulation typically requires banks to:

keep a minimum required reserve ratio.

Shibo deposits a $400 check in Collegiate Bank. The reserve requirement is 20 percent. If Collegiate Bank loans out the maximum possible, then which describes Collegiate Bank's balance sheet?

reserves of $400; loans of $320; demand deposits $720

Commodity-backed money _____ commodity money.

restricts the use of fewer resources than

Eli deposits $5,000 in cash in Big Bank and the reserve ratio is 10 percent. As a result, the:

total money supply does not change, just the composition from cash to demand deposits.

A typical grocery store has thousands of different items. There would be difficulties if the grocery store quoted the price of tuna in terms of cans of dog food, heads of lettuce, and number of oranges rather than in terms of dollars per unit of tuna. This exemplifies money's role as a:

unit of account.

When Jerry tries to decide whether to buy a Car A for $22,000 or a Car B for $20,000, he is using money as a(n):

unit of account.