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Multiple choices from Macro Economics.

1. Fractional reserve banking means that:

A.Banks are only a fraction of all the financial institutions.

B.Only a fraction of a bank's reserves is the cash it has in its vault.

C.Only a fraction of the nation's money supply is in the form of currency.

D.The reserves of a bank are only a fraction of its customer deposits.

 
Assets
 
Liabilities
Excess Reserves
$500
Deposits
$6,000
Required Reserves
$1,500
 
 
Loans
$4,000
 
 
Total
$6,000
Total
$6,000

2. Illustrate hat is the required reserve ratio?

1.10%

2.20%

3.25%

4.30%

The required reserve ratio cannot be determined with the information available.

3. Using table, what is the largest loan this bank can make?

1.$500

2.$1,500

3.$2,000

4.$4,000

5. $6,000

4. Using table 6.1, if someone deposits $500 of currency in this bank, what happens?

1.Total reserves rise by $500

2.Excess reserves rise by $500

3.Required reserves rise by $500

4.Loans rise by $500

5. A currency withdrawal from a checking account:

1.Immediately increases the money supply while reducing the ability of banks to make loans and create money in the future

2.Immediately decreases the money supply and has no effect on the ability of banks to make loans and create money in the future

3.Immediately decreases the money supply while reducing the ability of banks to make loans and create money in the future

4.Has no immediate effect on the money supply while reducing the ability of banks to make loans and create money in the future

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M921237

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