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3 Written questions

3 Multiple choice questions

  1. The interest rate banks and other depository institutions charge one another on overnight loans made out of their excess reserves.
  2. The funds that a bank has on deposit at the Federal Reserve Bank of its district (plus its vault cash).
  3. 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.

3 True/False questions

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


  2. Balance sheetThe currency a bank has in its vault and cash drawers.


  3. Required reservesThe 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.


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