8.Abasis pointequals¹/₁₀₀of a percentage point. So, 9.95% equals(Required)

1. None of the options
2. 99.5 basis point
3. 995 basis point
4. 9950 basis point
5. 0.995 basis point

9.Presently the Bank of Japan (BOJ) is engaged in increasing the money supply in the local market under the------ which started in -----.(Required)

1. Quantitative Easing (QE)Program, 2013
2. None of the options is correct
3. CD Selling Program, 2012
4. Treasury Bills selling Program, 2011
5. Moral Suasion Program, 2014

1. 10.Which of the following is not a goal of the central bank?(Required)None of the options answers the question.
2. Zero inflation
3. Stability of the general price level
4. Full employment of resources
5. Sustained economic growth

11.By controlling the rate of growth in the money supply, the central bank expects to-(Required)

1. Encourage banks to join the central bank
2. Influence the rate of growth in the economy
3. Control stock market activity
4. Reduce the deficit
5. Reduce bank failure

12.The dollar volume of deposits that the banking system can create for each new dollar of excess legal reserves injected into the banking system is known as(Required)

1. The deposit multiplier
2. MZ₂
3. None of the choices is correct
4. M₂
5. The money multiplier

13.Suppose the reserve requirement on transaction deposits is set by the Federal Reserve System at 15 percent and the banking system presently holds $25 million in excess reserves. Assuming all payments are made in the economy by drafts (checks) against transaction deposits, there are no leakages of funds into thrift deposits or additional excess reserves, all funds received are immediately loaned out by depository institutions as soon as they are received, what is the maximum volume of new deposits and loans that can be created by the banking system? (rounded to the nearest million dollars)(Required)

1. $167 million
2. $7 million
3. None of the options is correct
4. $250 million
5. $4 million

14.The monetary base is a principal determinant of the nation's money supply. The monetary base is:(Required)

1. The relationship between the size of the nation's money supply and the size of the total reserve base available to depositories
2. The difference between required reserves and excess reserves
3. The potential new deposits and loans resulting from an injection of excess reserves
4. The sum of legal reserves and coin and currency held by the public
5. The total of deposits each depository keeps with the Federal Reserve bank in its district

15.Which of the following statements is true of the money multiplier?(Required)

1. It is a principal determinant of the monetary base
2. It reflects the effect on the money supply resulting from a change in themonetary base
3. All the options are correct
4. Added to the deposit multiplier it identifies total legal reserves
5. It identifies factors which explain changes in the monetary base

16.The Federal Reserve requires a reserve requirement, RR_d, equal to 9% and a bank's own reserve rate for excess reserve requirement, EXR, is $1 for each $1000. If thatbank finds an excess of $1,000,000 in reserves, then the bank could absorban additionaldeposits and loans equal to(Required)

1. $10,989,010,98
2. $10,989,010.98
3. $10,989.01098
4. $10,989,01.098
5. None of the options

17.If households' currency-deposit ratio is 1.25, and they desire to maintain $9.25 in liquid savings assets for each dollar in their checking account, what must the banks' excess reserves ratio be if the money multiplier is 10 on the assumption that RR_dis 0 percent?(Required)

1. -0.05
2. 0.10
3. -0.10
4. 0.05
5. None of the options is correct

18.Suppose the monetary base is $300 billion, the money multiplier is 3. By how much must the Fed increase the monetary base to achieve a money supply of $1500 billion?(Required)

1. $500 billion
2. $300 billion
3. $600 billion
4. $900 billion
5. $200 billion

19.If the monetary base is $130 billion while the nation's money supply is $450 billion, what is the size of the money multiplier? (rounded to the nearest one tenth)(Required)

1. 3.5
2. None of the options given here.
3. 2.5
4. 3.2
5. 1.5

20.Which of the following instruments are examples of banknondepositsources of funds(Required)

1. Purchases of Federal Funds
2. Securitization of selected assets
3. Issuance of capital notes
4. Sales of securities through repurchase agreements
5. All the options are correct

21.Securitization of bank loans:(Required)

1. Protects depositors from poor lending decisions by their banks
2. Protects banks from default risk by providing loan insurance
3. None of the options
4. Permits banks to sell bundles of loans in the financial markets to raise capital
5. Means that there is a security or other collateral backing the loans

22.The structural change which makes banking organizations looking more and more like other financial-service providers is called:(Required)

1. Convergence
2. None of the options
3. Deregulation
4. Consolidation
5. Bank failure

23.TheBarings Bank, theUnited Kingdom's oldestinvestment bank, collapsed because of(Required)

1. Crime
2. Excessive risk-taking
3. Volatilityof economic and financial conditions
4. Intensified competition
5. Excessive optimism

24.The bank's operating efficiency (Operating Expenses/Operating Income) is considered to be good when the ratio is -(Required)

1. 70 percent or below
2. 80 percent or below
3. None of the options is correct
4. 75 percent or below
5. 60 percent or below

25.Let us consider the money creation of banks A, B, C and D. The process begins with bank A that receives $1,000 asdepositfrom an account holder. Then it begins money creation by keeping reserve 20 percent of the deposit and disbursing the rest asloan, which in turn is deposited in bank B. The process goes on and the cycle ends with bank D which disburses the deposited amount asloanafter setting aside the compulsory reserve.

What is the total amount of deposits received by these banks?(Required)

1. $5,000
2. $2,952
3. $2,900
4. None of the options
5. $2,800