Questions:
Question 1. The percentage of deposits that banks must hold as reserves is called the percentage rate.
required reserve ratio.
Fed rate.
discount rate.
Question 2.What is the maximum amount a bank can lend?
its total reserves
its excess reserves
its excess reserves divided by the required reserve ratio
the value of its checkable deposits times the required reserve ratio
Question 3. The aggregate M1 consists of
currency plus all deposits in financial institutions.
currency plus all deposits in all institutions.
currency plus checkable deposits in financial institutions.
currency plus all checkable deposits.
Question 4. If the Fed purchases $50,000 in T-bills from a bank, by how much will the bank's excess reserves increase?
by $50,000
by $50,000 times the required reserve ratio
by $50,000 divided by the required reserve ratio
Not enough information has been provided to answer the question.
Question 5. Reserves equal
deposits with the Fed plus holdings of U.S. government securities.
currency in circulation plus vault cash.
deposits with the Fed plus vault cash.
currency outstanding plus currency in circulation.
Question 6. The primary assets of the Fed are
discount loans and reserves.
discount loans and government securities.
government securities and reserves.
discount loans and open market operations.
Question 7. The monetary base is equal to
all currency in circulation plus all deposits in financial institutions.
all currency in circulation plus checkable deposits in financial institutions.
all currency in circulation plus reserves held by banks.
checkable deposits in depository institutions plus reserves held by banks.
Question 8. If the Fed purchases $1 million in securities from the nonbank public, the monetary base will rise by $1 million
if the public holds the proceeds as currency.
if the public deposits the proceeds as checkable deposits.
if the public deposits the proceeds with the Treasury in a monetary base account.
whether the public holds the proceeds as currency or deposits them as checkable deposits.
Question 9. If the Fed purchases $1 million worth of securities and the required reserve ratio is 8%, by how much will deposits increase (assuming no change in excess reserves or the public's currency holdings)?
rise by $1 million
decline by $1 million
rise by $8 million
rise by $12.5 million
Question 10. Which of the following accurately describes the relationship between excess reserves and checkable deposits following the financial crisis of 2007-2009?
Excess reserves declined as the excess reserve ratio returned to near zero.
Excess reserves rose to nearly one-third of checkable deposits.
Excess reserves approached the same level as checkable deposits.
Excess reserves exceeded checkable deposits.