Ch. 14 How Banks And Thrifts Create Money

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Finance 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.
A.
B.
2.  Goldsmiths increased the money supply when they accepted deposits of gold and issued paper receipts to the depositors.
A.
B.
3.  A desire by banks to hold excess reserves may reduce the size of the monetary multiplier.
A.
B.
4.  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.
5.  The legal reserve that a commercial bank maintains must equal its own deposit liabilities multiplied by the required reserve ration.
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.  Modern banking systems use hold as the basis for the fractional reserve system.
A.
B.
8.  Legal reserves permit the Board of Governors of the Federal Reserve System to influence the lending ability of commercial banks.
A.
B.
9.  When a borrower repays a loan of $500, either in cash or by check, the supply of money is reduced by $500.
A.
B.
10.  A commercial bank seeks both profits and liquidity, but these are conflicting goals.
A.
B.
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