1. Which of the following is not one of the general principles of bank management?

a. Personnel Management

b. Asset Management

c. Liability Management

d. Capital Adequacy Management

2. Suppose a bank has $100 million in assets, $500 million in bank capital, $200 million in reserves, and $1 billion in deposits. What is the equity multiplier for this bank?

a. Cant calculate without knowing bank profits

b. 0.2

c. 5

d. 3

3. Which of the following is an argument against Fed independence?

a. Independence is undemocratic

b. Independence reduces the likelihood of inflationary bias

c. Independence reduces the potential for a political business cycle

d. Independence reduces the principal-agent problem for politicians

4. What happens to the Monetary Base when banks borrow additional reserves from the Fed?

a. Monetary Base remains unchanged

b. Monetary Base increases

c. Monetary Base decreases

5. What is likely to happen to the money supply if the Fed increases the required reserve ratio?

a. Money Supply is unchanged

b. Money Supply will likely increase

c. Money Supply will likely decrease