Ch. 14 How Banks And Thrifts Create Money

10 Questions  I  By Ecofanics
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Money Quizzes & Trivia
Ch 14 McConnell and Brue.

  
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1.  The balance sheet of a commercial bank shows the transactions in which the bank has engaged during a given period of time.
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B.
2.  Goldsmiths increased the money supply when they accepted deposits of gold and issued paper receipts to the depositors.
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B.
3.  Modern banking systems use hold as the basis for the fractional reserve system.
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B.
4.  Cash held by a bank is sometimes called vault cash.
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B.
5.  Mary Lynn, a music star, deposits a $30,000 check in a commercial bank and receives a checkable deposit in return; one hour later the Manford Iron and Coal Company borrows $30,000 from the same bank.  The money supply has increased by $30,000 as a result of the two transactions.
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B.
6.  A commercial bank may maintain its legal reserve either as a deposit in its Federal Reserve Bank or as government bonds in its own vault.
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B.
7.  The legal reserve that a commercial bank maintains must equal its own deposit liabilities multiplied by the required reserve ration.
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B.
8.  Legal reserves permit the Board of Governors of the Federal Reserve System to influence the lending ability of commercial banks.
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B.
9.  The actual reserves of a commercial bank equal excess reserves plus required reserves.
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B.
10.  The reserve of a commercial bank in the Federal Reserve Bank is an asset of the Federal Reserve Bank.
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B.
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