ECO 103 Ch.13&14 Money, Banks & the Fed Resv

CHOOSE THE CORRECT ANSWER TO EXPLAINATION NEEDED.

QUESTION 1

To increase lending capacity the Fed does all the following except:

1. reduces the required reserve ratio
2. increases the discount rate
3. buys bonds
4. all of the above

5 points

QUESTION 2

Banks create money, but this ability is NOT determined by popularity of:

1. check writing
2. lending
3. borrowing
4. bank regulation
5. voting

5 points

QUESTION 3

Transaction accounts enable direct:

1. payment to third parties
2. deposit
3. reporting back to depositors
4. tracking by government

5 points

QUESTION 4

Deposit to bank A = $600 and required reserves = .25 then cumulative change in transaction deposits = $:

1. 480
2. 600
3. 2400
4. 3000

5 points

QUESTION 5

Deposit to bank A = $100 and deposit to bank B = $50, then:

1. required reserves = .2
2. deposit to bank C = $40
3. cumulative change in transaction deposits = $200
4. all of these

5 points

QUESTION 6

A Fractional Reserve Systems means banks:

1. allow borrowers to share loans
2. list interest as fractions
3. set aside a fraction of deposits
4. require only a portion of loans as collateral

5 points

QUESTION 7

A bond is sold for $500 and pays $50 each year in interest without any maturity date in sight. The yield is _ %.

1. 1
2. 5
3. 10
4. 20

5 points

QUESTION 8

To quell a bank run, FDR mandated a _ day "bank holiday".

1. 1
2. 5
3. 10
4. 20

5 points

QUESTION 9

To decrease lending capacity the Fed does all the following except:

1. increases the required reserve ratio
2. increases the discount rate
3. buy bonds
4. sells bonds

5 points

QUESTION 10

Deposit to bank A = $100 and deposit to bank B = $90, then

1. required reserves = .1
2. deposit to bank C = $81
3. cumulative change in transaction deposits = $1000
4. all of these

5 points

QUESTION 11

Transaction accounts include all the following except:

1. NOW accounts
2. ATC accounts
3. checking accounts
4. credit union share drafts
5. treasury bonds

5 points

QUESTION 12

Belowthe districts, the Federal Reserve has _ branches.

1. 4
2. 12
3. 25
4. 50

5 points

QUESTION 13

When money is deposited in a bank, most of this deposit is in turn:

1. held in a bank'svaults
2. held by the Federal Reserve
3. taxed by gov.
4. lent to a third party

5 points

QUESTION 14

A bond is sold for $1000 and pays $100 each year for a yield of 10%. An event causes this class of bonds to double in value but the bond still pays $100 yearly. The yield now is

1. 1
2. 5
3. 10
4. 20

5 points

QUESTION 15

The Federal Reserve's three monetary tools are all except:

1. reserve requirement
2. discount rate
3. open market operation
4. tax policy

5 points

QUESTION 16

The FDIC (Federal Deposit Insurance Corp) was created in the 19_.

1. 20's
2. 30's
3. 40's
4. 50's

5 points

QUESTION 17

The Federal Reserve has _ presidents.

1. 7
2. 12
3. 25
4. 50

5 points

QUESTION 18

M1is _M2.

1. bigger than
2. smaller than
3. equal to
4. is sometimes bigger and sometimes smaller

5 points

QUESTION 19

Deposit to bank A = $400 and required reserves = .2 then cumulative change in transaction deposits = $:

1. 320
2. 400
3. 1600
4. 2000

5 points

QUESTION 20

Medium of exchange means:

1. average shipment
2. something to convert all else into
3. location of a market
4. size limits