Which is the correct answer and why?

Incorrect Question 3 0/4 pts Fictional First Bank Assets Liabilities Cash in vault 100 Transaction 1000 deposits Deposits at Fed Non- 300 transaction 2000 deposits Securities 1000 Borrowing 300 Loans 2400 Refer to the balance sheet above, if the bank is required to keep 10% of transaction deposits in reserve, what is the maximum value of the loan that Fictional First can make? 100 @ 400 200 1000 300 Incorrect Question 4 0/4 pts If a bank experiences a large, unexpected withdrawal, which of the following is the least costly costly way for the bank to raise funds to meet the reserve requirement? borrow from another bank in the Federal Funds Market sell securities O reduce loan balance by calling in loans O issue shares of stock Incorrect Question 9 0/4 pts Bank capital has both benefits and costs for the bank owners. Higher bank capital the likelihood of bankruptcy, but higher bank capital the return on equity for a given return on assets. increases; increases O reduces; increases increases; reduces reduces; reduces Incorrect Question 13 0 / 4 pts Increasing interest rates charged on a loan solve the problem because good credit risks are more likely to refuse the high interest rate loan terms and bad credit risks more likely to accept. would/moral hazard would/adverse selection O would not/moral hazard would not/adverse selection Incorrect Question 14 0/4 pts First National Bank Assets Liabilities Rate-sensitive $40 million $50 million Fixed-rate $60 million $50 million Assuming that the average duration of its assets is four years, while the average duration of its liabilities is three years, then a 5 percentage point increase in interest rates will cause the net worth of First National to by of the total original asset value. decline; 15 percent decline; 10 percent increase; 20 percent decline; 5 percent Incorrect Question 17 0 / 4 pts Holding ROA constant, a bank could increase ROE by increasing retained earnings. selling shares of stock none of the above, ROE depends entirely on the profitability of assets. using borrowed funds to make more loans. reducing the value of liabilities relative to assets. Incorrect Question 18 0 / 4 pts The contagion effect refers to the fact that deposit insurance has eliminated the problem of bank failures. the failure of one bank can hasten the failure of other banks. @bank runs involve only insolvent banks. bank runs involve only sound banks. Incorrect Question 21 0 / 4 pts Regulators reduce risk in the banking industry by limiting bank holdings of Treasury securities. O requiring banks take make loans in all areas where they take deposits. O limiting the amount of capital banks hold. limiting bank holdings of stock. Incorrect Question 26 0/4 pts One example of consumer protection regulation is a requirement that banks examine all characteristics of the borrower, including race, gender, and marital status when making a loan. all of these a requirement that banks exclude residents of areas prone to default from receiving loans a requirement that banks disclose annual percentage rate (APR) on loans offered Incorrect Question 27 0 / 4 pts Restrictions on bank competition was motivated by the hypothesis that competition between banks encourages greater risk taking enco ages conservative bank management. eliminates the need for government regulation increases bank profitability. Incorrect Question 35 0 / 4 pts Critics of the current system of Fed independence contend that the president has too much control over monetary policy on a day-to-day basis. O the Board of Governors is held responsible for policy missteps. voters have too much say about monetary policy. the current system is undemocratic. Incorrect Question 39 0 / 4 pts When a primary dealer sells a government bond to the Federal Reserve, reserves in the banking system and the monetary base everything else held constant. increase; decreases decrease; increases decrease; decreases increase; increases Incorrect Question 42 0 / 4 pts Everything else held constant, an increase in currency holdings will cause the money supply to rise. checkable deposits to rise. O the money supply to fall. the money supply to remain constant. Incorrect Question 44 0/4 pts B Federal Funds Rated Federal Funds -RS Rated RS Art i or RD RD or Reserves Reserves D Federal Funds Rate la Federal Funds RS Rated RS fr i i or RD i_01 RD Reserves Reserves Refer to the images above. Suppose the initial Federal Funds rate is ffr*. Which of the following pictures best represents an increase in the Federal Funds rate resulting from an increase in the interest rate paid on reserves? B Incorrect Question 49 0/4 pts One of the advantages of inflation target is it reduces the time inconsistency problem it is very flexible and allows central bankers to have maximum flexibility in setting policy. it keeps investors guessing on the goals of monetary policy it gives politicians more control over monetary policy Incorrect Question 50 0 / 4 pts Using Taylor's rule, when the equilibrium real federal funds rate is 2 percent, there is no output gap, the actual inflation rate is zero, and the target inflation rate is 2 percent, the nominal federal funds rate should be 3 percent Opercent 1 percent 2 percent