Econ 3229 Ch 17

19 Questions  I  By Stlepin
Please take the quiz to rate it.

Econ 3229 Ch 17

  
Changes are done, please start the quiz.


Questions and Answers

Removing question excerpt is a premium feature

Upgrade and get a lot more done!
  • 1. 
    1. Each of the following items would appear as assets on the central bank's balance sheet, except: 
    • A. 

      Loans

    • B. 

      Securities

    • C. 

      Currency

    • D. 

      Foreign exchange reserves


  • 2. 
    2. The main asset held by a central bank is: 
    • A. 

      Foreign exchange reserves

    • B. 

      Currency

    • C. 

      Loans

    • D. 

      Securities


  • 3. 
    3. A central bank holds foreign exchange reserves primarily for: 
    • A. 

      Diversification purposes

    • B. 

      Foreign exchange intervention

    • C. 

      Safekeeping

    • D. 

      Diversification and safekeeping


  • 4. 
    4. For the Federal Reserve, the largest liability on its balance sheet is: 
    • A. 

      Commercial bank reserves

    • B. 

      Currency

    • C. 

      Governments accounts

    • D. 

      Treasury certificates


  • 5. 
    5. Reserves are: 
    • A. 

      Assets of the central bank and liabilities of the commercial bank

    • B. 

      Assets of the commercial banks and liabilities of the central bank

    • C. 

      Liabilities of the commercial and central banks

    • D. 

      Assets and liabilities for the central bank


  • 6. 
    6. Vault cash is: 
    • A. 

      Equal to the total amount of reserves and is an asset of the central bank

    • B. 

      Not reserves but is a liability of the central bank

    • C. 

      A part of reserves and an asset of commercial banks

    • D. 

      Not reserves but is an asset of central banks


  • 7. 
    7. Monetary policy operations for central banks are run through changes in the liability category of: 
    • A. 

      Governments accounts

    • B. 

      Currency

    • C. 

      Reserves

    • D. 

      Gold


  • 8. 
    8. The monetary base is the sum of: 
    • A. 

      Reserves and M2

    • B. 

      M1 and reserves

    • C. 

      Currency in the hands of the public, reserves and M1

    • D. 

      Currency in the hands of the public and reserves in the banking system


  • 9. 
    9. A central bank's sale of securities from its portfolio will: 
    • A. 

      Decrease the size of its balance sheet

    • B. 

      Have no impact at all on the balance sheet

    • C. 

      Only change the composition of its liabilities

    • D. 

      Only change the composition of its assets


  • 10. 
    10. Consider a $2 billion open market purchase of U.S. Treasury securities by the Federal Reserve. The Fed's balance sheet will specifically show:  
    • A. 

      Only an increase in the asset of securities of $2 billion

    • B. 

      Only show an increase in the liability of reserves of $2 billion

    • C. 

      No change in the size of the balance sheet, just the composition of assets will change from cash to securities

    • D. 

      An increase in the asset category of securities and the liability category of reserves by $2 billion


  • 11. 
    11. An open market sale of U.S. Treasury securities by the Fed will cause the Banking System's balance sheet to show: 
    • A. 

      Only an increase in liabilities

    • B. 

      Only a decrease in assets

    • C. 

      No net change in assets or liabilities, only a change in the composition of assets with securities decreasing and reserves increasing

    • D. 

      No net change in assets or liabilities, only a change in the composition of assets with securities increasing and reserves decreasing


  • 12. 
    12. The Fed sells German bonds to commercial banks. Which of the following best describes the impact on the Fed's and the Banking System's balance sheets resulting from this transaction? 
    • A. 

      The Fed's assets and liabilities increase, the banking systems assets and liabilities decrease

    • B. 

      The Fed's assets increase and its liabilities both increase. For the banking system, the value of assets and liabilities do not change, only the composition of assets changes

    • C. 

      The Fed's assets and liabilities do not change, only the compositions of the assets change. For the banking system, assets and liabilities increase

    • D. 

      The Fed's assets and liabilities both decrease. For the banking system, the value of assets and liabilities do not change, only the composition of assets changes


  • 13. 
    13. When the Fed makes a discount loan, the impact on the Fed's balance sheet is: 
    • A. 

      An increase in liabilities with no change in assets

    • B. 

      An increase in assets and a decrease in liabilities

    • C. 

      A decrease in assets and an increase in liabilities

    • D. 

      The same as that of an open market purchase


  • 14. 
    14. Tom decides to withdraw $300 out of his checking account. The impact of this transaction on the Fed's balance sheet will be: 
    • A. 

      No change in total assets or total liabilities, but an increase in the liability of currency and a decrease in the liability of reserves by $300 respectively

    • B. 

      No change in total assets but the liability of currency increases by $300

    • C. 

      Total assets decrease by $300 and the liability of currency increases by $300

    • D. 

      No change in either total assets or total liabilities


  • 15. 
    15. The term for turning reserves into bank deposits is called: 
    • A. 

      Discounting

    • B. 

      Balance sheet adjustment

    • C. 

      Multiple deposit creation

    • D. 

      Spreading


  • 16. 
    16. If Bank A sells a $100,000 U.S. Treasury bond to the Fed, Bank A's excess reserves will: 
    • A. 

      Increase by less than $100,000

    • B. 

      Not change

    • C. 

      Decrease by less than $100,000

    • D. 

      Increase by $100,000


  • 17. 
    17. Bank A has checkable deposits of $100 million, vault cash equaling $1 million and deposits at the Fed equaling $14 million. If the required reserve rate is ten percent what is the maximum amount Bank A could lend? 
    • A. 

      $85 million

    • B. 

      $15 million

    • C. 

      $14 million

    • D. 

      $5 million


  • 18. 
    18. If the required reserve rate is ten percent and banks do not hold any excess reserves and there are no changes in currency holdings, a $1 million open market purchased by the Fed will result in deposit creation of: 
    • A. 

      $9 million

    • B. 

      $90 million

    • C. 

      $10 million

    • D. 

      $900,000


  • 19. 
    19. If the Fed were to increase the required reserve rate from ten percent to twenty percent, the simple deposit expansion multiplier would: 
    • A. 

      Double

    • B. 

      Increase by 10 percent

    • C. 

      Decrease by a factor of 10

    • D. 

      Be half as large as it was before the increase


Back to top

Removing ad is a premium feature

Upgrade and get a lot more done!
Take Another Quiz
We have sent an email with your new password.