Question
1.If a bank has $100,000 in demand deposits and $30,000 on reserve with a 20 percent reserve requirement, the bank Group of answer choices has
1.If a bank has $100,000 in demand deposits and $30,000 on reserve with a 20 percent reserve requirement, the bank
Group of answer choices
has legal reserves of $10,000
has required reserves of $10,000
has excess reserves of $10,000
had requires reserves of $30,000
2.Which of the following could expand the money supply?
Group of answer choices
an increase in the required reserve ratio
an individual's cash withdrawal from a bank
an individual's purchase of a bond from the Fed
a decrease in the required reserve ratio
3.If the commercial banking system's excess reserves are zero and the reserve requirement is 10 percent, in order for the banking system to increase deposits by $2.5 million, the Fed must
Group of answer choices
permit the system to have prolonged reserve deficiencies
sell $250,000 of government securities to the general public
sell $2.5 million of government securities to the general public
buy $250,000 of government securities from the public.
4.If the legal reserve requirement is raised, the money multiplier
Group of answer choices
is doubled
is lowered
stays the same
is increased
5.Assume that required reserves are 20 percent. If the Fed buys $1,000 worth of bonds from a member bank, then the banking system can
Group of answer choices
decrease loans by a maximum of $5,000
increase loans by a maximum of $5,000
decrease loans by a maximum of $4,000
increase loans by a maximum of $4,000.
6.The initial impact of the Fed's open market sale of government securities to commercial banks is
Group of answer choices
an increase in commercial bank deposits at the Fed.
an increase in the money supply by some multiple of the dollar volume of the sale.
a fall in the money supply some multiple of the dollar volume of the sale.
a reduction of the commercial banking systems reserve deposits at the Fed.
7.The goal of a gold standard is to
Group of answer choices
return money back to its natural state
reduce uncertainty by limiting power of the Federal Reserve to increase the amount of money in circulation
shift wealth from the middle class to the rich
conserve on natural resources, such as pulpwood, used to make paper money
8.When a commercial bank borrows directly from the Fed, it pays
Group of answer choices
an interest rate called the federal funds rate
the Fed in a mutually agreed upon quantity of gold reserves in its vaults
a zero rate of interest
an interest rate called the discount rate.
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