464646446

Question 1
(6800278):
At certain times banks may not be willing to fully loan out all of their
_____________ and customers may not be willing to borrow.
Type: Multiple Choice
Points awarded: 1.00 / 1.00
Your Answer(s): excess reserves
Correct
answer(s):
excess reserves
legal reserves
required reserves
all the above

Question 2
(6800254):
A bank pays interest (the rental price paid for use of the money) on savings
accounts, CDs and on some types of__________________.
Your Answer(s): checking accounts
Correct
answer(s):
checking accounts
coffee can deposits
sugar bowl deposits
doggy deposits

Question 3
(6800267):
Each bank must report its legal reserves as well as its deposit liabilities
(depositors funds) to the __________________ in order to show compliance
with the required reserves policy .
Your Answer(s): Federal Reserve
Correct
answer(s):
Treasury Department
FDIC
Comptroller of the Currency
Federal Reserve

Question 4
(6800286):
The process of controlling the money supply is a tremendous responsibility
for the Fed since the health of the ___________ is at stake.
Your Answer(s): entire economy
Correct
answer(s):
stock market
housing market
entire economy
none of the above

Question 5
(6800298):
The banking system facilitates the savings and investment process that is
essential to economic stability and growth.
Type: True or False
Your Answer(s): True
Correct True
answer(s): False

Question 6
(6800292):
During periods of recession a(n) ___________ money policy is appropriate
to encourage business expansion with low interest rate.
Your Answer(s): tight
Correct
answer(s):
tight
neutral
easy
none of the above

Question 7
(6800248):
M1 is the narrow measure of the money supply and consists of currency
outside the banking system plus _________________inside the banking
system.
Your Answer(s): checkable deposits
Correct
answer(s):
savings deposits
small time deposits (passbook and CDs)
checkable deposits
all the above

Question 8
(6800274):
Assume $1,000 is deposited in a checkable account by Mr. X in Bank
A. Assume further that the reserve requirement is 0.20. The total amount of
money which can be created by this excess reserve at Bank A is $________ .
Your Answer(s): 800
Correct
answer(s):
200
800
1000
none of the above

Question 9
(6800260):
________________are the mandated form of required reserves. These must
be in cash in the vault or a deposit with the Fed.
Your Answer(s): Legal Reserves
Correct
answer(s):
Excess Reserves
Net Worth Reserves
Legal Reserves
None of the above

Question 10
(6800265):
Money (as defined in M1) is created in the loan process because when a bank
makes a loan these funds are usually deposited into a _______________ .
Your Answer(s): checkable account
Correct
answer(s):
savings account
checkable account
Certificate of Deposit (CD)
None of the above

Question 11
(6800272):
An individual bank will lose reserves to another bank when a check is written
and deposited at the second bank.
Type: True or False
Correct
answer(s):
True
False

Question 12
(6800247):
Through the operation of the Goldsmiths principle and making loans on
excess reserves, new _________ and purchasing power was (were) created in
the local economy.
Your Answer(s): money
Correct
answer(s):
money
credit cards
stocks and bonds
jewelry

Question 13
(6800296):
For the Fed there must be a _____________ between maintaining banking
stability for the nation and allowing individual banks to operate profitably.
Your Answer(s): balance
Correct
answer(s):
conflict
dichotomy
balance
none of the above

Question 14
(6800284):
The money multiplier process also works in reverse when a loan is repaid
and the amount of money that is destroyed is equal to the loan repayment
times the money multiplier.
Type: True or False
Correct
answer(s):
True
False

Question 15
(6800288):
The money control process is called________________.
Your Answer(s): monetary policy
Correct
answer(s):
fiscal policy
foreign policy
military policy
monetary policy

Question 16
(6800269):
Money is ____________ when a customer repays a loan to a bank.
Your Answer(s): destroyed
Correct
answer(s):
created
not affected
destroyed
none of the above

Question 17
(6800282):
Assume a required reserve ratio of 10 percent. If a loan of $100 is deposited
into First Bank which then lends out $90 and the process continues to its
maximum through the banking system, then the total increase in money
supply M1 is $________ .
Your Answer(s): 90
Correct
answer(s):
1000
900
100
90

Question 18
(6800251):
Commercial bank deposits with the Fed become ___________ of the bank
making the deposit.
Your Answer(s): Assets
Correct
answer(s):
Profits
Assets
Net Income
Net Worth

Question 19
(6800258):
The __________ requirement varies depending on the size of an individual
bank and depending on the type of deposit that is made in that bank.
Your Answer(s): Legal Reserve
Correct
answer(s):
Excess Reserve
Net Worth
Legal Reserve
None of the above

Question 20
(6800257):
___________________ are mandated by the Fed to exert control over the
amount of funds that banks can loan.
Your Answer(s): Required Reserves
Correct
answer(s):
Fed Funds
Required Reserves
Extenuating Reserves
None of the above

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