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    Quiz - Chapter 35 Quiz

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    This document contains a 20 question quiz about banking concepts such as the money supply, reserve ratios, and balance sheets. The quiz covers topics like how different bank transactions affect reserves, deposits, and the money supply as well as calculating values from bank balance sheets given reserve ratio requirements.

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    Quiz - Chapter 35 Quiz

    Uploaded by

    rojascollegeemail
    315 views8 pages
    This document contains a 20 question quiz about banking concepts such as the money supply, reserve ratios, and balance sheets. The quiz covers topics like how different bank transactions affect reserves, deposits, and the money supply as well as calculating values from bank balance sheets given reserve ratio requirements.

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    This document contains a 20 question quiz about banking concepts such as the money supply, reserve ratios, and balance sheets. The quiz covers topics like how different bank transactions affect reserves, deposits, and the money supply as well as calculating values from bank balance sheets given reserve ratio requirements.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    315 views8 pages

    Quiz - Chapter 35 Quiz

    Uploaded by

    rojascollegeemail
    This document contains a 20 question quiz about banking concepts such as the money supply, reserve ratios, and balance sheets. The quiz covers topics like how different bank transactions affect reserves, deposits, and the money supply as well as calculating values from bank balance sheets given reserve ratio requirements.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 8

    Chapter 35 Quiz

    Started: Apr 19 at 9:20pm

    Quiz Instructions

    Question 1 1 pts
    Which of the following transactions has the immediate effect of increasing the money supply M1?

    A commercial bank lends some excess reserves in the federal funds market.

    A commercial bank increases its reserve holdings.

    A commercial bank accepts deposits from its customers.

    A commercial bank buys government securities from the general public.


    Question 2 1 pts

    (1) Legal Reserve Ratio


    (%) (2) Checkable Deposits (3) Actual Reserves
    10 $ 40,000 $ 10,000
    20 40,000 10,000
    25 40,000 10,000
    30 40,000 10,000

    The accompanying table gives data for a commercial bank or thrift. When the legal reserve ratio is 25
    percent, the excess reserves of this single bank are

    $5,000.

    $0.

    $1,000.

    $30,000.


    Question 3 1 pts
    When the receipts given by goldsmiths to depositors were used to make purchases,
    a fractional reserve banking system was created.

    existing banking laws were violated.

    the gold standard was created.

    the receipts became in effect paper money.


    Question 4 1 pts
    Money is destroyed when

    checks written on one bank are deposited in another bank.

    loans are repaid.

    loans are made.

    the net worth of the banking system declines.


    Question 5 1 pts
    When a check is cleared against a bank, the bank will lose

    reserves and capital stock.

    cash and securities.

    checkable deposits and reserves.

    loans and demand deposits.


    Question 6 1 pts

    Assets Liabilities and Net Worth


    Reserves $ 20 Checkable Deposits $ 100
    Loans 25 Stock Shares 50
    Securities 15
    Property 90
    Refer to the accompanying balance sheet for the First National Bank of Bunco. All figures are in
    millions. If this bank has excess reserves of $6 million, the legal reserve ratio must be

    12 percent.

    10 percent.

    20 percent.

    14 percent.


    Question 7 1 pts
    The federal funds rate is the rate that banks pay for loans from

    the U.S. Treasury.

    other banks.

    the Fed.

    large corporations.


    Question 8 1 pts
    A bank has excess reserves of $5,000 and demand deposits of $50,000; the required reserve ratio is
    20 percent. If the reserve ratio is raised to 25 percent, then this bank can lend a maximum of

    $2,500.

    $1,000.

    $2,000.

    $1,500.


    Question 9 1 pts
    The claims of depositors of a bank against the bank's assets are called

    liabilities.
    required reserves.

    net worth.

    loans.


    Question 10 1 pts
    Which of the following are liabilities to a bank?

    demand and time deposits

    property and capital stock

    vault cash and demand deposits

    capital stock and reserves


    Question 11 1 pts
    If we both have checking accounts in the same commercial bank and I write a check in your favor for
    $200, the bank's

    reserves and checkable deposits will both decline by $200.

    liabilities will decline by $200, but its net worth will increase by $200.

    assets and liabilities will both decline by $200.

    balance sheet will be unchanged.


    Question 12 1 pts
    Assume Company X deposits $100,000 in cash in commercial Bank A. If no excess reserves exist at
    the time this deposit is made and the reserve ratio is 20 percent, Bank A can increase the money
    supply by a maximum of

    $80,000.

    $50,000.
    $500,000.

    $180,000.


    Question 13 1 pts

    Assets Liabilities and Net Worth


    Reserves $ 27,000 Checkable Deposits $ 110,000
    Loans 50,000 Stock Shares 200,000
    Securities 33,000
    Property 200,000

    Refer to the accompanying balance sheet for the ABC National Bank. Assume the required reserve
    ratio is 20 percent. Assuming the bank loans out all of its remaining excess reserves as a checkable
    deposit and has a check cleared against it for that amount, its reserves and checkable deposits will
    now be

    $22,000 and $105,000, respectively.

    $22,000 and $110,000, respectively.

    $32,000 and $115,000, respectively.

    $25,000 and $122,000, respectively.


    Question 14 1 pts
    A commercial bank has no excess reserves until a depositor places $2,000 in cash in the bank. The
    reserve ratio is 10 percent. The bank then lends $1,500 to a borrower. As a consequence of these
    transactions, the bank's excess reserves are

    increased by $300.

    increased by $200.

    not affected.

    increased by $500.


    Question 15 1 pts
    Assets Liabilities + Net Worth
    Reserves $ 50,000 Checkable Deposits $ 120,000
    Loans 75,000 Stock Shares 130,000
    Securities 25,000
    Property 100,000

    Refer to the accompanying balance sheet for the First National Bank. Assume the reserve ratio is 15
    percent. If a check for $14,000 is drawn and cleared against this bank, then its reserves and
    checkable deposits will be

    $36,000 and $106,000, respectively.

    $36,000 and $120,000, respectively.

    $50,000 and $106,000, respectively.

    $50,000 and $120,000, respectively.


    Question 16 1 pts
    Fractional reserve banking refers to a system where banks

    deposit a fraction of their reserves at the central bank.

    accept a portion of their deposits in checkable accounts.

    grant loans to their borrowing customers.

    hold only a fraction of their deposits in their reserves.


    Question 17 1 pts

    Assets Liabilities and Net Worth


    Reserves $ 27,000 Checkable Deposits $ 110,000
    Loans 50,000 Stock Shares 200,000
    Securities 33,000
    Property 200,000

    Refer to the accompanying balance sheet for the ABC National Bank. Assume the required reserve
    ratio is 20 percent. This bank can safely expand its loans by a maximum of
    $7,000.

    $12,000.

    $5,000.

    $25,000.


    Question 18 1 pts
    Which of the following are all assets to a commercial bank?

    demand deposits, stock shares, and reserves

    vault cash, property, and stock shares

    vault cash, stock shares, and demand deposits

    vault cash, property, and reserves


    Question 19 1 pts
    Henry deposits $2,000 in currency in the First Street Bank. Later that same day, Jane Harris
    negotiates a loan for $5,400 at the same bank. After these transactions, the supply of money has

    increased by $2,100.

    increased by $5,400.

    decreased by $3,300.

    increased by $3,300.


    Question 20 1 pts
    Commercial banks monetize claims when they

    borrow from the Federal Reserve Banks.

    accept repayment of outstanding loans.


    make loans to the public.

    collect checks through the Federal Reserve System.

    Quiz saved at 9:42pm Submit Quiz

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