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Ch. 14 How Banks And Thrifts Create Money

10 Questions  I  By Ecofanics
Ch. 14 How Banks and Thrifts Create Money
Ch 14 McConnell and Brue.

  
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1.  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.
2.  When borrowers from a commercial bank wish to have cash rather than checkable deposits, the money creating potential of the banking system is increased.
A.
B.
3.  The Federal funds rate is the interest rate at which the Federal government lends funds to commercial banks.
A.
B.
4.  A desire by banks to hold excess reserves may reduce the size of the monetary multiplier.
A.
B.
5.  The actual reserves of a commercial bank equal excess reserves plus required reserves.
A.
B.
6.  Goldsmiths increased the money supply when they accepted deposits of gold and issued paper receipts to the depositors.
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.  A single commercial bank can safely lend an amount equal to its excess reserves multiplied by the monetary multiplier ration.
A.
B.
10.  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.
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