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5 Written Questions

5 Matching Questions

  1. When a bank makes a loan:
  2. Money is functioning as a store of value if you
  3. Suppose a bank has $1,000,000 in deposits and a minimum reserve requirement of 20 percent. Then required reserves are
  4. If excess reserves are $50,000, demand deposits are $1,000,000 and the minimum reserve requirement is 5 percent, then total reserves are:
  5. Use the following balance sheet for XYZ Bank, which is one of many banks in a banking system.
    Table 13.1—XYZ Bank balance sheet
    ASSETS
    Total Reserves $50,000
    Other Assets $150,000

    LIABILITIES
    Transaction Accounts $200,000

    Refer to Table 13.1. With a required reserve ratio of 15 percent, XYZ Bank would have excess reserves of:
  1. a Put it in a savings account so you can buy a new car next summer
  2. b It creates a transactions-account balance for the borrower
  3. c $200,000
  4. d $100,000
  5. e $20,000

5 Multiple Choice Questions

  1. Savings accounts
  2. Money-market mutual funds
  3. Bank reserves
  4. 10
  5. $50,000

5 True/False Questions

  1. Suppose Caroline finds $10,000 under her bed and deposits it in her checking account. If the required reserve ratio is 25 percent, this deposit has the potential of increasing the money supply byDoes not change in value

          

  2. Constraints on deposit creation include all of the following except:Purchase stock

          

  3. Professor Williams tutors her next-door neighbor's son in economics. Instead of paying her for this service, the neighbor washes the professor's car. This is an example ofBarter

          

  4. 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
    Assets
    Total Reserves: $150,000
    Other Assets: $850,000

    Liabilities
    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
    Zero

          

  5. If excess reserves are $30,000, demand deposits are $500,000 and the minimum reserve requirement is 10 percent, then total reserves are:$80,000

          

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