Flashcards in Macro Economics Chapter 15 Quiz Deck (10):
The required reserves of a bank are: A: held as deposits with the Federal Reserve System.B: equal to its loans. C: equal to its checkable deposits. D: none of the above.
Banks normally hold few excess reserves because this practice is: A: subject to an excess-reserves tax. B: not profitable. C: against Fed policy. D: illegal.
Which of the following would be classified as a liability for a bank? A: Required reserves. B: Excess reserves. C: Loans. D: Checkable deposits.
The quantity of reserves held by a bank in addition to the legally required amounts is known as: A: actual reserves. B: excess reserves. C: the required reserve ratio. D: the money multiplier. E: the monetary base.
When new checkable deposits are created through loans, A: the money supply contracts. B: excess reserves are destroyed. C: the money supply remains the same. D: the money supply expands. E: the required reserve ratio declines
Best National Bank operates with a 20 percent required-reserve ratio. One day a depositor withdraws $500 from his or her checking account at this bank. As a result, the bank's excess reserves:A: fall by $500. B: fall by $400. C: rise by $100. D: rise by $500.
If a bank keeps some of its excess reserves, the money multiplier: A: increases. B: stays the same. C: goes to zero. D: decreases. E: increases, then decreases.
Which of the following directs the buying and selling of U.S. government securities? A: Board of Governors. B: Federal Reserve Banks. C: Federal Open Market Committee. D: Federal Advisory Council. E: Member banks.
Which of the following is an appropriate monetary policy if the Fed wants to increase the money supply? A: An increase in the required reserve ratio. B: An increase in the discount rate. C: Purchases of bonds in open market operations. D: Higher taxes on interest income.