Question
21.Suppose a bank receives a $5,000 deposit and the required reserve ratio is 25%. Based on this deposit alone, the bank can lend out: a.$4,500
21.Suppose a bank receives a $5,000 deposit and the required reserve ratio is 25%. Based on this deposit alone, the bank can lend out:
a.$4,500
b.$4,000
c.$3,000
d.$3,750
22.The major overall purpose of the Federal Reserve System is to
a.keep the discount rate flexible.
b.insure the deposits of persons holding funds with banking institutions.
c.regulate the money supply, and, thereby, provide a monetary climate that is in the best interest of the economy.
d.regulate the levels of excess reserves held by member banking institutions.
23.Open-market operations occur when the Federal Reserve:
a.buys U.S. Treasury bills from the federal government.
b.buys or sells foreign currency.
c.buys or sells existing U.S. Treasury bills.
d.sells U.S. Treasury bills to the federal government.
24.If the Fed decreased the discount rate,
a.the earnings of the Fed would increase.
b.incentive of commercial banks to borrow from the Fed would be increased.
c.the prime interest rate would automatically decline.
d.incentive of commercial banks to borrow from the Fed would be reduced.
25.The demand for money is higher in Japan than in the United States because:
a.telecommunications and information technology is more advanced in the United States than in Japan.
b.Japanese consumers use credit cards more than people in the United States
c.Japanese interest rates are very high in comparison to interest rates in the United States.
d.Japanese interest rates are very low in comparison to interest rates in the United States
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