Question 1

For a single bank in a large banking system,excess reserves are equal to the:

Accepted Answer

A)   Amount of money that the Federal Reserve System makes available for loans.
B)   Amount of reserves that a bank must hold above the loans that it makes.
C)   Amount of loans a bank can make after meeting the reserve requirement.
D)   Difference between transaction account balances and loans.E) None of the above
F) All of the above

Question 2

Deposit creation is constrained by the willingness of consumers and businesses to use and accept checks rather than cash for market transactions.

Accepted Answer

A) True 
 B)False

Question 3

The essential characteristics of money are that it serves as a medium of exchange,a store of value,and a standard of value.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following is an essential function performed by banks?

Accepted Answer

A)   Transferring funds from spenders to savers.
B)   Transferring funds from savers to spenders.
C)   Keeping the money supply constant.
D)   Lending funds to the Federal Reserve.E) B) and C)
F) A) and C)

Question 5

Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system.
Table 13.2-Bank of the Universe Balance Sheet 
-Refer to Table 13.2.With a required reserve ratio of 12 percent,Bank of the Universe would have excess reserves of:

Accepted Answer

A)   $30,000.
B)   $120,000.
C)   $150,000.
D)   $1,000,000.E) All of the above
F) C) and D)

Question 6

Money functions well as a store of value when prices are rising.

Accepted Answer

A) True 
 B)False

Question 7

Banks do all of the following except:

Accepted Answer

A)   Purchase stock.
B)   Earn a profit.
C)   Make loans.
D)   Accept deposits.E) C) and D)
F) B) and D)

Question 8

If you deposit $1,000 in your checking account,your bank is only required to hold a portion of the deposit and is allowed to lend out the balance.This illustrates the concept known as:

Accepted Answer

A)   Split reserves.
B)   Money laundering.
C)   Fractional reserves.
D)   Demand deposits.E) A) and D)
F) A) and C)

Question 9

Which of the following is a direct result of a fractional reserve banking system?

Accepted Answer

A)   The money multiplier is greater than 1.
B)   Excess reserves are equal to zero.
C)   Required reserves are equal to total reserves.
D)   Banks can loan only their required reserves.E) All of the above
F) A) and D)

Exam 13: Money and Banks

For a single bank in a large banking system,excess reserves are equal to the:

Correct Answer
verified

Which of the following is an essential function performed by banks?

Correct Answer
verified

If you deposit $1,000 in your checking account,your bank is only required to hold a portion of the deposit and is allowed to lend out the balance.This illustrates the concept known as:

Correct Answer
verified

Which of the following is a direct result of a fractional reserve banking system?

Correct Answer
verified

The essential characteristics of money are that it serves as a medium of exchange,a store of value,and a standard of value.

Correct Answer
verified

Deposit creation is constrained by the willingness of consumers and businesses to use and accept checks rather than cash for market transactions.

Correct Answer
verified

Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system. Table 13.2-Bank of the Universe Balance Sheet -Refer to Table 13.2.With a required reserve ratio of 12 percent,Bank of the Universe would have excess reserves of:

Correct Answer
verified

Money functions well as a store of value when prices are rising.

Correct Answer
verified

Banks do all of the following except:

Correct Answer
verified

Exam 13: Money and Banks

For a single bank in a large banking system,excess reserves are equal to the:

Correct AnswerverifiedShow Answer

Which of the following is an essential function performed by banks?

Correct AnswerverifiedShow Answer

If you deposit $1,000 in your checking account,your bank is only required to hold a portion of the deposit and is allowed to lend out the balance.This illustrates the concept known as:

Correct AnswerverifiedShow Answer

Which of the following is a direct result of a fractional reserve banking system?

Correct AnswerverifiedShow Answer

The essential characteristics of money are that it serves as a medium of exchange,a store of value,and a standard of value.

Correct AnswerverifiedShow Answer

Deposit creation is constrained by the willingness of consumers and businesses to use and accept checks rather than cash for market transactions.

Correct AnswerverifiedShow Answer

Use the following balance sheet for Bank of the Universe,which is one of many banks in a banking system. Table 13.2-Bank of the Universe Balance Sheet -Refer to Table 13.2.With a required reserve ratio of 12 percent,Bank of the Universe would have excess reserves of:

Correct AnswerverifiedShow Answer

Money functions well as a store of value when prices are rising.

Correct AnswerverifiedShow Answer

Banks do all of the following except:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified

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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