464646446

Question 1 (6800278):At certain times banks may not be willing to fully loan out all of their _____________ and customers may not be willing to borrow.

Type:Multiple Choice

Points awarded:1.00 / 1.00

Your Answer(s):excess reserves

Correct answer(s):excess reserves legal reservesrequired reservesall the above

Question 2 (6800254):A bank pays interest (therentalprice paid for use of the money) on savings accounts, CDs and on some types of__________________.



Your Answer(s):checking accounts

Correct answer(s):checking accountscoffee can depositssugar bowl depositsdoggy deposits

Question 3 (6800267):Each bank must report its legal reservesas well asits deposit liabilities (depositors funds) to the __________________ in order to show compliance with the required reserves policy .



Your Answer(s):Federal Reserve

Correct answer(s):Treasury DepartmentFDICComptroller of the CurrencyFederal Reserve

Question 4 (6800286):The process of controlling the money supply is a tremendous responsibility for the Fed since the health of the ___________ is at stake.



Your Answer(s):entire economy

Correct answer(s):stock markethousing marketentire economynone of the above

Question 5 (6800298):The banking system facilitates the savings and investment process that is essential to economic stability and growth.

Type:True or False


Your Answer(s):True

Correct answer(s):TrueFalse

Question 6 (6800292):During periods of recession a(n) ___________ money policy is appropriate to encourage business expansion with low interest rate.



Your Answer(s):tight

Correct answer(s):tightneutraleasynone of the above

Question 7 (6800248):M1 is the narrow measure of the money supply and consists of currency outside the banking system plus _________________inside the banking system.



Your Answer(s):checkable deposits

Correct answer(s):savings depositssmall time deposits (passbook and CDs)checkable depositsall the above

Question 8 (6800274):Assume $1,000 is deposited in a checkable account by Mr. X in Bank A.Assume further that the reserve requirement is 0.20.The total amount of money which can be created by this excess reserveat Bank Ais $________ .



Your Answer(s):800

Correct answer(s):2008001000none of the above

Question 9 (6800260):________________are the mandated form of required reserves.These must be in cash in the vaultora deposit with the Fed.



Your Answer(s):Legal Reserves

Correct answer(s):Excess ReservesNet Worth ReservesLegal ReservesNone of the above

Question 10 (6800265):Money (as defined in M1) is created in the loan process because when a bank makes a loan these funds are usually deposited into a _______________ .



Your Answer(s):checkable account

Correct answer(s):savings accountcheckable accountCertificate of Deposit (CD)None of the above

Question 11 (6800272):An individual bank will lose reserves to another bank when a check is written and deposited at the second bank.

Type:True or False


Your Answer(s):True


Question 12 (6800247):Through the operation of the Goldsmiths principle and making loans on excess reserves, new _________ and purchasing power was (were) created in the local economy.



Your Answer(s):money

Correct answer(s):moneycredit cardsstocks and bondsjewelry

Question 13 (6800296):For the Fed there must be a _____________ between maintaining banking stability for the nationandallowing individual banks to operate profitably.



Your Answer(s):balance

Correct answer(s):conflictdichotomybalancenone of the above

Question 14 (6800284):The money multiplier process also works in reverse when a loan is repaid and the amount of money that is destroyed is equal to the loan repayment times the money multiplier.

Type:True or False


Your Answer(s):True


Question 15 (6800288):The money control process is called________________.



Your Answer(s):monetary policy

Correct answer(s):fiscal policyforeign policymilitary policymonetary policy

Question 16 (6800269):Money is ____________ when a customer repays a loan to a bank.



Your Answer(s):destroyed

Correct answer(s):creatednot affecteddestroyednone of the above

Question 17 (6800282):Assume a required reserve ratio of 10 percent.If a loan of $100 is deposited into First Bank which then lends out $90 and the process continues to its maximum through the banking system, then the total increase in money supply M1 is $________ .



Your Answer(s):90

Correct answer(s):100090010090

Question 18 (6800251):Commercial bank deposits with the Fed become ___________ of the bank making the deposit.



Your Answer(s):Assets

Correct answer(s):ProfitsAssetsNet IncomeNet Worth

Question 19 (6800258):The __________ requirement varies depending on the size of an individual bank and depending on the type of deposit that is made in that bank.



Your Answer(s):Legal Reserve

Correct answer(s):Excess ReserveNet WorthLegal Reserve None of the above

Question 20 (6800257):___________________ are mandated by the Fed to exert control over the amount of funds that banks can loan.



Your Answer(s):Required Reserves

Correct answer(s):Fed FundsRequired ReservesExtenuating ReservesNone of the above

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