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Ch. 14 How Banks And Thrifts Create Money

10 Questions  I  By Ecofanics
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Finance Quizzes & Trivia
Ch 14 mcconnell and brue.

  
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1.  Modern banking systems use hold as the basis for the fractional reserve system.
A.
B.
2.  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.
3.  The reserve of a commercial bank in the Federal Reserve Bank is an asset of the Federal Reserve Bank.
A.
B.
4.  Goldsmiths increased the money supply when they accepted deposits of gold and issued paper receipts to the depositors.
A.
B.
5.  If the banking system has $10 million in excess reserves and if the reserve ratio is 25%, the system can increase its loans by $40 million.
A.
B.
6.  The balance sheet of a commercial bank shows the transactions in which the bank has engaged during a given period of time.
A.
B.
7.  The monetary multiplier is excess reserves divided by required reserves.
A.
B.
8.  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.
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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