The formula for the simple deposit multiplier can be expressed asĪ) triangleR=(1 divide _elementsubscript_element) multiplytriangleD B) triangleR=(1 divide _elementsubscript_element) multiplytriangleD C) triangleD=(1 divide _elementsubscript_element) multiplytriangleR D) triangler=(1 divide _elementsubscript_element) multiplytriangleTġ4) If reserves in the banking system increase by $100, then checkable deposits will increase by $1000 in the simple model of deposit creation when the required reserve ratio is A) 0.05 B)ġ5) Which of the following are not found on the asset side of the Fed's balance sheet? A) U.S. D) vault cash, deposits at the Fed, and currency in circulation.ġ2) When the Fed supplies the banking system with an extra dollar of reserves, deposits increase by more than one dollar-a process called A) multiple deposit creation. C) vault cash, deposits at the Fed, and Federal Reserve currency in circulation. B) Government securities and currency in circulation. B)ġ0) If the required reserve ratio is 15 percent, the simple deposit multiplier is approximately A) 6.67 B)Ī) Federal Reserve currency in circulation and Treasury currency in circulation. If the reserve ratio is raised to 25 percent, the bank's excess reserves will be A) -$ 1,000. E) $36,000.ĩ) A bank has excess reserves of $6,000 and demand deposit liabilities of $100,000 when the required reserve ratio is 20 percent. D) the excess reserves it has before it makes the loan.Ĩ) If a bank has excess reserves of $10,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20 percent, then the bank has actual reserves of A) $26,000. C) the total reserves it has before it makes the loan. D) deposits with the Fed minus vault cash plus required reserves.Ī bank cannot increase its loans by an amount greater thanĪ) 5 percent of its net worth. D) do both (a) and (c).Ī) vault cash plus deposits with Federal Reserve banks minus required reserves. D) both (a) and (b) occur.ĥ) When the Fed wants to increase the level of reserves in the banking system, it canĪ) purchase government bonds. C) reserves in the banking system increase. B) reserves in the banking system decline. When the Federal Reserve sells a government bond in the open market,Ī) Federal Reserve liabilities remain unchanged. ![]() D) reserves in the banking system decline. B) Federal Reserve liabilities remain unchanged. When the Federal Reserve purchases a government bond in the open market,Ī) reserves in the banking system increase. ![]() Treasury's monetary liabilities is called A) the money supply. B)Ģ) The sum of the Fed's monetary liabilities and the U.S. 1) Of the four players in the money supply process, most observers agree that the most important player is A) depositors. Choose the one alternative that best completes the statement or answers the question.
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