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