Question 1

If the reserve ratio for all banks is 5 percent,then $1,000 of additional reserves can create up to

Accepted Answer

A)   $5,500 of new money.
B)   $5,000 of new money.
C)   $4,000 of new money.
D)   None of the above is correct.E) None of the above
F) A) and B)

Question 2

Table 29-5.
Bank of Kopeka
 
-Refer to Table 29-5.The Bank of Kopeka's reserve ratio is

Accepted Answer

A)   1 percent.
B)   5 percent.
C)   10 percent.
D)   20 percent.E) A) and B)
F) None of the above

Question 3

Banks still could contribute to changes in the money supply,even if they were required to hold all deposits in reserve.

Accepted Answer

A) True 
 B)False

Question 4

Table 29-2.An economy starts with $10,000 in currency.All of this currency is deposited
into a single bank,and the bank then makes loans totaling $9,250.The
T-account of the bank is shown below.
 
-Refer to Table 29-2.If all banks in the economy have the same reserve ratio as this bank,then the value of the economy's money multiplier is

Accepted Answer

A)   1.33.
B)   10.00.
C)   10.81.
D)   13.33.E) B) and D)
F) C) and D)

Question 5

The Fed can directly protect a bank during a bank run by

Accepted Answer

A)   increasing reserve requirements.
B)   selling government bonds to the bank.
C)   lending reserves to the bank.
D)   doing any of the above.E) None of the above
F) A) and D)

Question 6

Which of the three functions of money are commonly met by each of the following assets in the U.S.economy?
a.
paper dollar
b.
precious metals
c.
collectibles such as baseball cards,stamps,and antiques

Accepted Answer

a.
medium of exchang...

Question 7

As the reserve ratio increases,the money multiplier

Accepted Answer

A)   increases.
B)   does not change.
C)   decreases.
D)   could do any of the above.E) C) and D)
F) A) and B)

Question 8

On a bank's T-account,

Accepted Answer

A)   both deposits and reserves are assets.
B)   both deposits and reserves are liabilities.
C)   deposits are assets and reserves are liabilities.
D)   reserves are assets and deposits are liabilities.E) A) and C)
F) A) and B)

Question 9

When the Fed purchases $200 worth of government bonds from the public,the U.S.money supply eventually increases by

Accepted Answer

A)   more than $200.
B)   exactly $200.
C)   less than $200.
D)   All of the above are possible.E) None of the above
F) B) and C)

Question 10

Scenario 29-2.
The Monetary Policy of Tazi is controlled by the country's central bank known as the Bank of Tazi.The local unit of currency is the Taz.Aggregate banking statistics show that collectively the banks of Tazi hold 300 million Tazes of required reserves,75 million Tazes of excess reserves,have issued 7,500 million Tazes of deposits,and hold 225 million Tazes of Tazian Treasury bonds.Tazians prefer to use only demand deposits and so all money is on deposit at the bank.
-Refer to Scenario 29-2.Suppose that the Bank of Tazi changes the reserve requirement ratio to 3 percent.Assuming that the banks still want to hold the same percentage of excess reserves what is the value of the money supply after the change in the reserve requirement ratio?

Accepted Answer

A)   9,375 million Tazes
B)   10,000 million Tazes
C)   12,500 million Tazes
D)   None of the above is correct to the nearest million salidos.E) B) and D)
F) None of the above

Question 11

If a bank has a reserve ratio of 8 percent,then

Accepted Answer

A)   government regulation requires the bank to use at least 8 percent of its deposits to make loans.
B)   the bank's ratio of loans to deposits is 8 percent.
C)   the bank keeps 8 percent of its deposits as reserves and loans out the rest.
D)   the bank keeps 8 percent of its assets as reserves and loans out the rest.E) C) and D)
F) A) and B)

Question 12

If the reserve ratio increased from 10 percent to 20 percent,the money multiplier would

Accepted Answer

A)   rise from 10 to 20.
B)   rise from 5 to 10.
C)   fall from 10 to 5.
D)   not change.E) None of the above
F) A) and D)

Question 13

According to economists,a collection of valuable jewels is not money.

Accepted Answer

A) True 
 B)False

Question 14

During a bank run,depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits.

Accepted Answer

A)   Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply increase.
B)   Both the decision to hold relatively more currency and the decision to hold relatively more excess reserves would make the money supply decrease.
C)   The decision to hold relatively more currency would make the money supply increase.The decision to hold relatively more excess reserves would make the money supply decrease.
D)   The decision to hold relatively more currency would make the money supply increase.The decision to hold relatively more excess reserves would make the money supply decreaseE) B) and C)
F) A) and B)

Question 15

If the reserve ratio for all banks is 12.5 percent,then $1,000 of additional reserves can create up to

Accepted Answer

A)   $7,000 of new money.
B)   $8,000 of new money.
C)   $11,500 of new money.
D)   $12,500 of new money.E) C) and D)
F) B) and C)

Question 16

What makes the New York Federal Reserve regional bank so important?

Accepted Answer

The president of the New York Federal Re...

Question 17

Fiat money

Accepted Answer

A)   is worthless.
B)   has no intrinsic value.
C)   may be used as a medium of exchange,but it is not legal tender.
D)   performs all the functions of money except the unit-of-account function.E) B) and C)
F) A) and D)

Question 18

Who was appointed chairman of the Board of Governors in 2005 by President George W.Bush?

Accepted Answer

A)   Alan Greenspan
B)   Bennett McCallum
C)   R.Glenn Hubbard
D)   Ben BernankeE) A) and C)
F) C) and D)

Question 19

The Federal Reserve is a privately operated commercial bank.

Accepted Answer

A) True 
 B)False

Question 20

The banking system currently has $10 billion of reserves,none of which are excess.People hold only deposits and no currency,and the reserve requirement is 10 percent.If the Fed raises the reserve requirement to 20 percent and at the same time buys $1 billion of bonds,then by how much does the money supply change?

Accepted Answer

A)   It falls by $45 billion.
B)   It falls by $52 billion.
C)   It falls by $55 billion.
D)   None of the above is correct.E) B) and D)
F) B) and C)

Exam 29: The Monetary System

What makes the New York Federal Reserve regional bank so important?

Correct Answer
verified
The president of the New York Federal Re...
View Answer

When the Fed purchases $200 worth of government bonds from the public,the U.S.money supply eventually increases by

Correct Answer
verified

If the reserve ratio for all banks is 12.5 percent,then $1,000 of additional reserves can create up to

Correct Answer
verified

During a bank run,depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits.

Correct Answer
verified

Banks still could contribute to changes in the money supply,even if they were required to hold all deposits in reserve.

Correct Answer
verified

Which of the three functions of money are commonly met by each of the following assets in the U.S.economy? a. paper dollar b. precious metals c. collectibles such as baseball cards,stamps,and antiques

Correct Answer
verified
a.
medium of exchang...
View Answer

Correct Answer
verified

According to economists,a collection of valuable jewels is not money.

Correct Answer
verified

On a bank's T-account,

Correct Answer
verified

If the reserve ratio increased from 10 percent to 20 percent,the money multiplier would

Correct Answer
verified

If the reserve ratio for all banks is 5 percent,then $1,000 of additional reserves can create up to

Correct Answer
verified

Correct Answer
verified

The Fed can directly protect a bank during a bank run by

Correct Answer
verified

If a bank has a reserve ratio of 8 percent,then

Correct Answer
verified

Table 29-5. Bank of Kopeka -Refer to Table 29-5.The Bank of Kopeka's reserve ratio is

Correct Answer
verified

Correct Answer
verified

The Federal Reserve is a privately operated commercial bank.

Correct Answer
verified

Fiat money

Correct Answer
verified

As the reserve ratio increases,the money multiplier

Correct Answer
verified

Who was appointed chairman of the Board of Governors in 2005 by President George W.Bush?

Correct Answer
verified

Exam 29: The Monetary System

What makes the New York Federal Reserve regional bank so important?

Correct AnswerverifiedThe president of the New York Federal Re...View AnswerShow Answer

When the Fed purchases $200 worth of government bonds from the public,the U.S.money supply eventually increases by

Correct AnswerverifiedShow Answer

If the reserve ratio for all banks is 12.5 percent,then $1,000 of additional reserves can create up to

Correct AnswerverifiedShow Answer

During a bank run,depositors decide to hold more currency relative to deposits and banks decide to hold more excess reserves relative to deposits.

Correct AnswerverifiedShow Answer

Banks still could contribute to changes in the money supply,even if they were required to hold all deposits in reserve.

Correct AnswerverifiedShow Answer

Which of the three functions of money are commonly met by each of the following assets in the U.S.economy? a. paper dollar b. precious metals c. collectibles such as baseball cards,stamps,and antiques

Correct Answerverifieda.medium of exchang...View AnswerShow Answer

Correct AnswerverifiedShow Answer

According to economists,a collection of valuable jewels is not money.

Correct AnswerverifiedShow Answer

On a bank's T-account,

Correct AnswerverifiedShow Answer

If the reserve ratio increased from 10 percent to 20 percent,the money multiplier would

Correct AnswerverifiedShow Answer

If the reserve ratio for all banks is 5 percent,then $1,000 of additional reserves can create up to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Fed can directly protect a bank during a bank run by

Correct AnswerverifiedShow Answer

If a bank has a reserve ratio of 8 percent,then

Correct AnswerverifiedShow Answer

Table 29-5. Bank of Kopeka -Refer to Table 29-5.The Bank of Kopeka's reserve ratio is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Federal Reserve is a privately operated commercial bank.

Correct AnswerverifiedShow Answer

Fiat money

Correct AnswerverifiedShow Answer

As the reserve ratio increases,the money multiplier

Correct AnswerverifiedShow Answer

Who was appointed chairman of the Board of Governors in 2005 by President George W.Bush?

Correct AnswerverifiedShow Answer

Correct Answer
verified
The president of the New York Federal Re...
View Answer

Correct Answer
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Correct Answer
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a.
medium of exchang...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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