3 Written Questions

1. The 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. The interest rate banks and other depository institutions charge one another on overnight loans made out of their excess reserves.
3. The currency a bank has in its vault and cash drawers.

3 Multiple Choice Questions

1. A reserve requirement that is less than 100 percent of the checkable-deposit liabilities of a commercial bank or thrift institution.
   1. Actual reserves
   2. Required reserves
   3. Reserve ratio
   4. Fractional reserve banking system
2. The funds that banks and thrifts must deposit with the Federal Reserve Bank (or hold as vault cash) to meet the legal reserve requirement; a fixed percentage of the bank's or thrift's checkable deposits.
   1. Reserve ratio
   2. Excess reserves
   3. Actual reserves
   4. Required reserves
3. The funds that a bank has on deposit at the Federal Reserve Bank of its district (plus its vault cash).
   1. Vault cash
   2. Excess reserves
   3. Actual reserves
   4. Required reserves

3 True/False Questions

1. Excess reserves → The funds that a bank has on deposit at the Federal Reserve Bank of its district (plus its vault cash).

   True        False

2. Balance sheet → The currency a bank has in its vault and cash drawers.

   True        False

3. Reserve ratio → 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.

   True        False