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5 Written Questions

5 Matching Questions

  1. Use the following balance sheet for Bank of the Universe, which is one of many banks in a banking system.
    Table 13.2—Bank of the Universe Balance Sheet
    Total Reserves: $150,000
    Other Assets: $850,000

    Transactions Accounts $1,000,000

    Refer to Table 13.2. With a required reserve ratio of 15 percent, Bank of the Universe would have excess reserves of
  2. Which of the following has not served as a form of money for the United States
  3. Which of the following is not a function performed by banks?
  4. Suppose the entire banking system has $10,000 in excess reserves and a required reserve ratio of 20 percent. The deposit-creation potential of the banking system is:
  5. Suppose the entire banking system has a required reserve ratio of 0.20. How much can the money supply increase in response to a $1 billion increase in excess reserves for the whole banking system?
  1. a $50,000
  2. b Zero
  3. c Determining fiscal policy
  4. d $5 billion
  5. e Eggs

5 Multiple Choice Questions

  1. Buy lunch at a fast food restaurant for yourself and your friend
  2. Is the direct exchange of one good or service for another
  3. Reserves never leave the bank
  4. $100,000
  5. Store of value

5 True/False Questions

  1. The term fractional reserves refers toReserves being a fraction of total deposits


  2. When an individual deposits cash or coins in a transactions account, there isCash


  3. The reserve requirement directly limits the ability of banks to:Make new loans


  4. If total reserves for a bank are $25,000, excess reserves are zero and demand deposits are $100,000, then the money multiplier must be:4.00


  5. For a single bank in a large banking system, excess reserves are equal to theAmount of loans a bank can make after meeting the reserve requirement


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