The reserve requirement sets the required percentage of vault cash plus deposits with the regional Federal Reserve Banks that banks must keep for their deposits. Many banks have widespread branches and ATMs. How would the existence of branches and ATMs affect the level of excess reserves (above those required) that banks are able to hold?

	ATMs require a lot of vault cash, thus increasing excess reserves.
	ATMs increase excess reserves, which increases the money multiplier.
	The existence of ATMs does not affect the level of excess reserves.
	More ATMs will reduce excess reserves.

The U.S. government produces billions of dollars in banknotes and coins for use in everyday transactions. Based on the given information, which of these is false?

	A portion of checking deposits is loaned out by banks.
	The more currency that is in circulation, the higher will be the interest rate in the economy.
	The deposits and lending that occur in a bank starts the money creation process.
	The currency in circulation alone represents money creation.

For what type of borrowing does the federal funds rate apply?

	from commercial banks to the government
	from Federal Reserve Bank to commercial banks
	from consumers to commercial banks
	from commercial banks to other commercial banks

Alan Greenspan, the former chairman of the Fed, noted that “the Federal Reserve has to be independent in its actions and as an institution, because if Federal Reserve independence is in any way compromised, it undercuts our capability of protecting the value of the currency in society.” What does Alan Greenspan mean when he states “protecting the value of the currency”?

	using gold and silver to back up currency
	creating deflation
	creating hyperinflation
	controlling inflation

Which of these is true?

	A loan to a customer is considered a liability to the bank.
	Checking accounts are considered liabilities to the bank.
	Converting cash to checkable deposits increases the money in circulation.
	The reserve requirement is the percentage of deposits that banks can loan out.