Question
1. Reserves a. equal the deposits banks hold at the Fed. b. include bank holdings of U.S. government securities c. can be divided up into
1. Reserves
a. equal the deposits banks hold at the Fed.
b. include bank holdings of U.S. government securities
c. can be divided up into required reserves plus excess reserves
d. a & c
2. When a $1,000 check written on the Chase Manhattan Bank is deposited in an account at the Bank of America, then
a. the liabilities of Chase Manhattan Bank increase by $1,000
b. the reserves of Chase Manhattan Bank increase by $1,000
c. the liabilities of Bank of America fall by $1,000
d. the reserves of Bank of American increase by $1,000
3. When you deposit a $100 check in your bank account at the First National Bank of Chicago and you withdraw $50 in cash, then
a. the liabilities of the First National Bank rise by $100
b. the reserves of the First National Bank rise by $100
c. the assets of the First National Bank rise by $100
d. the liabilities of the First National Bank rise by $50
4. If a bank has $1 million of deposits and required reserve ratio of 5 percent, and it holds $100,000 in reserves, then it must rearrange its balance sheet if there is a deposit outflow of
a. $51,000
b. $20,000
c. $30,000
d. $41,000
e. none of the above
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