Chapter 35 Quiz
Started: Apr 19 at 10:05pm
Quiz Instructions
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Question 1 1 pts
If the reserve requirement is 10 percent, what amount of excess reserves does a bank acquire when
a business deposits a $500 check drawn on another bank?
$450
$5,000
$550
$400
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Question 2 1 pts
The reserve ratio refers to the ratio of a bank's
reserves to its liabilities and net worth.
required reserves to its checkable-deposit liabilities.
checkable deposits to its total liabilities.
capital stock to its total assets.
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Question 3 1 pts
Assets
Stock Shares
$ 400
Reserves
40
Property
300
Securities
160
Loans
80
Demand Deposits
180
Liabilities and Net Worth
The figures in the table are for a single commercial bank. All figures are in thousands of dollars. This
bank has liabilities and net worth totaling
$400 million.
$440 million.
$550 million.
$580 million.
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Question 4 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
decreased by $3,300.
increased by $3,300.
increased by $5,400.
increased by $2,100.
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Question 5 1 pts
When a bank loan is repaid, the supply of money
may either increase or decrease.
is increased.
is constant, but its composition will have changed.
is decreased.
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Question 6 1 pts
Suppose that a bank's actual reserves are $5 million, its checkable deposits are $5 million, and its
excess reserves are $3 million. The reserve requirement must be
40 percent.
10 percent.
20 percent.
5 percent.
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Question 7 1 pts
When the receipts given by goldsmiths to depositors were used to make purchases,
the gold standard was created.
the receipts became in effect paper money.
existing banking laws were violated.
a fractional reserve banking system was created.
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Question 8 1 pts
Which of the following statements is correct?
When borrowers repay bank loans, the supply of money increases.
The actual reserves of a commercial bank equal its excess reserves minus its required reserves.
A single commercial bank can safely lend a multiple amount of its excess reserves.
A bank's liabilities plus its net worth equal its assets.
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Question 9 1 pts
The last transaction in the federal funds market occurred in 2008 because
the federal funds rate has been set too high.
in response to the financial crisis, the Federal Reserve raised the reserve ratio to 100 percent.
the Federal Reserve closed down the federal funds market.
since the financial crisis, nearly every bank has significant excess reserves.
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Question 10 1 pts
Reserves
$100
Checkable Deposits
1,000
Loans (to customers)
300
Property
400
Securities (owned)
300
Stock Shares
100
Refer to the accompanying table of information for the Moolah Bank. Assume that the listed amounts
constitute this bank's complete set of accounts. Moolah's
liabilities are $1,000.
profit is $1,000.
net worth is zero.
assets are $1,000.
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Question 11 1 pts
A commercial bank has excess reserves of $5,000 and a required reserve ratio of 20 percent. It
makes a loan of $6,000 to a borrower. The borrower writes a check for $6,000 that is deposited in
another commercial bank. After the check clears, the first bank will be short of reserves in the amount
of
$1,200.
$1,000.
$6,000.
$5,000.
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Question 12 1 pts
One major component of money supply M1 is part of a bank's
liabilities.
assets.
net worth.
reserves.
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Question 13 1 pts
In essence, which of the following groups "creates" money?
banks' loan officers when they grant loans
depositors when they deposit or withdraw money from their banks
consumers when they go shopping
firms when they pay workers their wages and salaries
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Question 14 1 pts
The claims of depositors of a bank against the bank's assets are called
required reserves.
liabilities.
loans.
net worth.
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Question 15 1 pts
A bank temporarily short of required reserves may be able to remedy this situation by
buying bonds from the public.
borrowing funds in the federal funds market.
shifting some of its vault cash to its reserve account at the Federal Reserve.
granting new loans.
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Question 16 1 pts
Suppose the reserve requirement is 10 percent. If a bank has $5 million of checkable deposits and
actual reserves of $500,000, the bank
cannot safely lend out more money.
can safely lend out $500,000.
can safely lend out $50,000.
can safely lend out $5 million.
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Question 17 1 pts
Assets
Stock Shares
Liabilities and Net Worth
$ 400
Reserves
40
Property
300
Securities
160
Loans
80
Demand Deposits
180
The figures in the table are for a single commercial bank. All figures are in thousands of dollars. This
bank has total assets of
$340 million.
$520 million.
$440 million.
$580 million.
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Question 18 1 pts
Assets
Stock Shares
Liabilities and Net Worth
$ 400
Reserves
40
Property
300
Securities
160
Loans
80
Demand Deposits
180
The figures in the table are for a single commercial bank. All figures are in thousands of dollars. If the
required reserve ratio is 10 percent, the bank has excess reserves of
$22,000.
$16,000.
$28,000.
$18,000.
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Question 19 1 pts
If the Federal Reserve System sells $5 billion of government securities to commercial banks, the
banks' reserves would
remain the same.
increase by $5 billion
be added to net worth.
decrease by $5 billion.
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Question 20 1 pts
Suppose a commercial bank has checkable deposits of $100,000 and the legal reserve ratio is 10
percent. If the bank's required and excess reserves are equal, then its actual reserves
are $20,000.
are $10,000.
are $1,000,000.
cannot be determined from the given information.
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