macro: introduction to fractional reserve banking
If the reserve requirement is 10% and a bank has $100,000 in checking deposits, $50,000 in savings deposits, and has made $20,000 in loans to businesses, what is the bank's required reserves?
$15,000
First National Bank of Hamsterville has a reserve requirement of 5%. It currently has $400,000 in checking deposits, $100,000 in savings deposits, and has made $40,000 in loans to businesses How much is the bank required to keep in reserves?
$25,000
The Iron Bank has a reserve requirement of 20%. It currently has $200,000 in checking deposits, $100,000 in savings deposits, and has made $50,000 in loans to businesses How much is the bank required to keep in reserves?
$60,000
Which of the following leads to an increase in the money supply?
An increase in excess reserves
Which of the following will lead to an increase in the money supply?
An increase in loans made from excess reserves
Milton deposits $100,000 in the First Bank of the Shire. Which of the following best describes the initial impact this deposit will have on the bank's balance sheet?
Assets will increase; liabilities will increase
Which of the following would be counted as a liability on a bank's balance sheet?
Checking accounts
The central bank of Westeros bought $2000 worth of bonds from the Iron Bank for $2000. How does this affect the Iron Bank's balance sheet?
Excess reserves
Banks in Westeros have been required to keep 10% of all checkable deposits on reserve, but now the central bank has changed the reserve requirement to 20%. What immediate effect does this have on banks' balance sheets?
Excess reserves decrease.
The central bank bought $5000 of existing bonds from a bank in Hamsterville. How does this affect the bank's balance sheet?
Excess reserves increase by $5000$5000dollar sign, 5000.
If the Frankland Community Bank has $5000 worth of bonds that it sells for $5000 in cash, how does its balance sheet change?
Excess reserves increase by $5000, but there is no change in total assets
If the Bank of the North has $1000 worth of bonds that it sells for $1000, how does its balance sheet change?
Excess reserves increase, but there is no change in total assets
Banks in Hamsterville have been required to keep 25% of all checkable deposits on reserve, but now the central bank has changed the reserve requirement to 10%. What immediate effect does this have on banks' balance sheets?
Excess reserves increase.
If the central bank of Dorn decreases the reserve requirement of banks, how does this immediately affect a typical bank's balance sheet?
Excess reserves increase.
Cersei deposited $5000 in the bank. The bank kept $500 in its vault and loaned out $4500. Which of the following best describes what the bank is doing?
Fractional reserve banking
When Hodor deposited $1000 in the bank, the bank kept $200 in its vault and loaned out $800. Which of the following best describes what the bank is doing?
Fractional reserve banking
Which of the following is true about excess reserves held by a bank?
They form the basis of the expansion of the money supply.
Which of the following statements is true about most depository banks?
They use a fractional reserve system.bank
Sansa recently started a position as an intern at the Iron Bank and is making entries on the Bank's balance sheet. Which of the following should she put under assets?
bonds
All of the following are part of a bank's assets EXCEPT:
checking accounts
Grey Worm is working at the Iron Bank and is making entries on the bank's balance sheet. Which of the following should he put under liabilities?
checking deposits
All of the following are part of a bank's liabilities EXCEPT:
consumer loans
Gendry is a bank intern putting entries into a bank's balance sheet. Which of the following should he count as an asset?
consumer loans
All of the following are part of a bank's assets EXCEPT:
demand deposits
Sansa recently started a position as an intern at the Iron Bank and is making entries on the Bank's balance sheet. Which of the following should she put under liabilities and equity?
deposit accounts
A defining characteristic of a fractional reserve banking system is
the fact that banks do not keep all deposits on reserve.
Which of the following best describes required reserves in fractional reserve banking?
the money a bank must keep in reserve based on the checkable deposits it holds
Required reserves are best described by which of the following statements?
the proportion of checkable deposits that a bank must keep on hand
