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3 Written questions

3 Multiple choice questions

  1. The fraction of checkable deposits that a bank must hold as reserves in a Federal Reserve Bank or in its own bank vault; also called the reserve requirement.
  2. The amount by which a bank's or thrift's actual reserves exceed its required reserves; actual reserves minus required reserves.
  3. The interest rate banks and other depository institutions charge one another on overnight loans made out of their excess reserves.

3 True/False questions

  1. Monetary multiplierThe multiple of its excess reserves by which the banking system can expand checkable deposits and thus the money supply by making new loans (or buying securities); equal to 1 divided by the reserve requirement.

          

  2. Fractional reserve banking systemThe funds that a bank has on deposit at the Federal Reserve Bank of its district (plus its vault cash).

          

  3. Required reservesThe amount by which a bank's or thrift's actual reserves exceed its required reserves; actual reserves minus required reserves.

          

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