ECON Practice Questions. Need help with a few, help would be appreciated. Thanks!
mercial banks 21. The reserve requirement represents [A] the percentage of required reserves that exceed total reserves. [B] the percentage of received funds that a bank must, by law, keep as reserves. [C] the percentage of received funds that a bank must, by law, lend to its customers. [D] the requirement to keep a given proportion of reserves as cash. [E] the percentage of excess reserves that must be loaned. 23. An increase in the reserve requirement from 20 percent to 25 percent will most likely [A] increase total deposits and the deposit expansion multiplier. [B] reduce the amount of reserves required. [C] increase the money supply. [D] reduce excess reserves and the deposit expansion multiplier. [E] reduce total deposits in the banking system.25. An increase in nominal income will cause (A] an increase in the quantity demanded of money. [B] a decrease in the quantity demanded of money. [C] a decrease in the demand for money [D] a decrease in the supply of money. [E] an increase in the demand for money. 27. If the Fed wants to decrease equilibrium income, it should _the supply of money, which will _ interest rates. The change in interest rates will consumption and investment, causing aggregate demand to [A] increase; increase; increase; increase [B] increase; increase; decrease; decrease [C] decrease; decrease; increase; increase [D] increase; decrease; increase; increase (EJ decrease; increase; decrease; decrease Show all X Fron 211 ner 2020 F..pdf DF . .. Open file 8:27 PM 24GOT 12/14/2020 O Type here to search29. Consider the First National Bank of Rozzelle. The bank has deposits of $400,000, loans of $300,000, vault cash of $20,000, and deposits at the Fed of $80,000. The reserve requirement is 2.5 percent. The bank's legal reserves are , and excess reserves are_ . The deposit expansion multiplier is , and the banking system could create a maximum of_ in new money. [A] $100,000; $90,000; 2.5; $225,000 [B] $100,000; $90,000; 40; $3,600,000 [C] $20,000; $10,000; 40; $400,000 [D] $20,000; $18,000; 40; $720,000 [E] $100,000; $975,000; 40; $3,900,000 33. The Fed controls GDP [A] directly through government spending. [B] indirectly through the money supply. [C] indirectly through the foreign exchange market. [D] indirectly through tax collections. [E] directly through price indexing. con 211 Dec 2020 E..pdf . .. Open file Show all X Type here to search W 8:29 PM 12/14/202035. The Fed's most important monetary function is [A] to regulate the money supply. [B] to serve as the banker for the U.S. government. [C] to supervise member banks. [D] to aid in the check-clearing process. [E] to hold reserve deposits of commercial banks. 36. When the Federal Reserve decreases the reserve requirement, this will [A] decrease excess reserves. [B] increase legal reserves. [C] increase the money supply. [D] increase the discount rate. [B] decrease aggregate demand. 37. Raising the reserve requirement will [A] reduce interest rate ceilings. [B] reduce the deposit expansion multiplier. [C] increase excess reserves. [D] lower the discount rate. [E] increase the money supply. Show all X Econ 211 Dec 2020 E..pdf PDF . . . Open file 8:31 PM 12/14/2020 Type here to search O w 8:29 PM W 12/14/2020 Type here to search43. Investment spending rises as a result of [A] a decline in aggregate supply. [B] an increase in money demand. [C] an increase in money supply. [D] a decline in aggregate demand. [E] a decline in money supply. 44. If the Fed wants to increase equilibrium income, it should_ the supply of money, which will interest rates. The change in interest rates will consumption and investment, causing aggregate demand to [A] increase; decrease; increase; increase [B] decrease; increase; decrease; decrease [C] increase; increase; increase; increase [D] increase; increase; decrease; decrease [E] decrease; decrease; increase; increase 45. A decrease in nominal income will cause [A] an increase in the demand for money. [B] an increase in the quantity demanded of money. [C] a decrease in the demand for money. [D] a decrease in the quantity demanded of money. [E] a decrease in the supply of money. 46. To increase the money supply, the Fed would X [A] increase the reserve requirement and the discount rate, and sell bonds. Show all X con 211 Dec 2020 E...pdf . . . Open file 8:33 PM O W @~ DE 12/14/2020 Type here to searchEL 7. If the aggregate supply curve is horizontal at potential real GDP, [A] the effect of government spending on real GDP is diminished. [B] prices will increase as government spending increases. [C] the government must increase its spending by the amount of the recessionary gap to reach potential income. [D] prices will decrease as government spending increases. [E] the government must increase its spending by more than the recessionary gap to reach potential income. Crowding out refers [A] an increase in the consumption of imports at the expense of domestic goods and services. [B] a decrease in consumption or investment spending caused by government spending. [C] an increase in the consumption of domestic goods and services at the expense of imports. [D] a decrease in exports because of higher government spending. Econ 211 Dec 2020 E...pdf PDF . .. Show all X Open file 8:20 PM Type here to search W 12/14/2020
