Chapter 27 - Macroeconomics

अब Quizwiz के साथ अपने होमवर्क और परीक्षाओं को एस करें!

A bank must balance​ ______ against​ ______. security for​ depositors; profit for stockholders

A bank makes a profit by borrowing from depositors at a low interest rate and lending at a higher interest rate. The bank must hold enough reserves to meet​ depositors' withdrawals. The​ bank's balancing act is to balance the risk of loans​ (profits for​ stockholders) against the security for depositors

Think about the definition of​ money, and then choose the correct statement.

Deposits are​ money, checks are not​ money, and credit cards are not money.

Choose the statement about money that is correct.

In the United States today, money consists of currency and deposits at banks and other depository institutions.

The table gives information from a​ bank's balance sheet. Calculate the​ bank's loans,​ securities, and reserves. The​ bank's loans are ​$1150 million. (Loans to businesses) The​ bank's securities are ​$700 million. (Government securities) The​ bank's reserves are ​$90 million. (reserves at the fed + currency)

Item ​(millions of​ dollars) Checkable deposits 300 Savings deposits 400 Small time deposits 1240 Loans to businesses 1,150 Government securities 700 Currency 40 Reserves at the Fed 50

Choose the statement about money that is correct.

Money acts as a unit of account, which is an agreed measure for stating the prices of goods and services.

A bank holds ​$6 for every​ $100 in deposits. The bank wants to hold ​$2 for every​ $100 in deposits. The bank holds excess reserves of ​$8,000 and actual reserves of ​$21,000. What is the actual reserve​ ratio, the desired reserve​ ratio, and the desired reserves​?

The actual reserve ratio is 0.06 The desired reserve ratio is 0.02 The desired reserves are $13,000

The desired reserve ratio is 2 ​percent, and the currency drain ratio is 4 percent of deposits. The central bank makes an open market purchase of ​$4 million of securities. Calculate the change in the monetary base and the change in its components. When the central bank makes an open market purchase of ​$4 million of​ securities, the component of the monetary base that changes is​ _______.

The change in the monetary base is an increase of ​$4 million. Bank reserves

A bank has the following deposits and​ assets: Checkable​ deposits, ​$300 Savings​ deposits, ​$1,360 Small time​ deposits, ​$675 Loans to​ businesses, ​$1,734 Outstanding credit card​ balances, ​$400 Government​ securities, ​$200 ​Currency, ​$1 Reserve account at the​ Fed, ​$6 Calculate the​ bank's total deposits and the amount of deposits that are part of M1 and M2.

The​ bank's total deposits are ​$2335. (checkable deposits + saving deposits + small time deposits) Deposits that are part of M1 are ​$300. (Checkable deposits) Deposits that are part of M2 are ​$2335. (checkable deposits + saving deposits + small time deposits)

If the Fed makes an open market sale of​ $1 million of securities to a​ bank, the​ bank's reserves​ ______. Excess reserves​ ______.

decrease; decrease ​decrease; decreases

What is a​ bank's balancing​ act? A bank must balance​ ______ against​ ______.

security for​ depositors; profit for stockholders

One of the​ Fed's policy tools is​ ______.

the discount​ rate, which is the interest rate at which the Fed stands ready to lend reserves to commercial banks

The​ Fed's policy tools include​ ______. To increase its assets to​ $4 trillion, the Fed used​ ______.

the required reserve​ ratio, discount​ rate, and open market operations ​large-scale open market operations called quantitative easing


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