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Ch. 14 How Banks And Thrifts Create Money

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

  
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1.  The actual reserves of a commercial bank equal excess reserves plus required reserves.
A.
B.
2.  The selling of a government bond by a commercial bank will increase the money supply.
A.
B.
3.  Goldsmiths increased the money supply when they accepted deposits of gold and issued paper receipts to the depositors.
A.
B.
4.  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.
A.
B.
5.  A check for $1000 drawn on Bank X by a depositor and deposited in Bank Y will increase the excess reserves in Bank Y by $1000.
A.
B.
6.  There is a need for the Federal Reserve System to control the money supply because profit-seeking banks tend to make changes in the money supply that are pro-cyclical.
A.
B.
7.  The monetary multiplier is excess reserves divided by required reserves.
A.
B.
8.  The reserve of a commercial bank in the Federal Reserve Bank is an asset of the Federal Reserve Bank.
A.
B.
9.  The balance sheet of a commercial bank shows the transactions in which the bank has engaged during a given period of time.
A.
B.
10.  When a borrower repays a loan of $500, either in cash or by check, the supply of money is reduced by $500.
A.
B.
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