ECON1301-WK5-L32 – Flashcards
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The goldsmith's ability to create money was based on the fact that:
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Paper money in the form of gold receipts was rarely redeemed for gold.
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Which of the following statements is correct?
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A single commercial bank can safely lend a multiple amount of its excess reserves INCORRECT
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A bank that has assets of $85 billion and a net worth of $10 billion must have:
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Excess reserves of $10 billion INCORRECT
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The claims of the owners of a firm against the firm's assets are called:
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Net worth
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A commercial bank's reserves are:
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Assets to the commercial bank and liabilities to the Federal Reserve Bank holding them
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The ABC Commercial Bank has $5,000 in excess reserves and the reserve ratio is 30 percent. This information is consistent with the bank having:
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$90,000 in checkable deposit liabilities and $32,000 in reserves.
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Refer to row 1 in the above table. The number appropriate for space W is:
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10
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Refer to row 2 in the above table. The number appropriate for space X is:
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$100,000
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Refer to row 3 in the above table. The number appropriate for space Y is:
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$32,000
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Refer to row 4 in the above table. The number appropriate for space Z is:
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$10,000
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When a check is drawn and cleared, the
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Bank against which the check is cleared loses reserves and deposits equal to the amount of the check.
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Suppose the ABC bank has excess reserves of $4,000 and outstanding checkable deposits of $80,000. If the reserve requirement is 25 percent, what is the size of the bank's actual reserves?
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$24,000
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Excess reserves refer to the:
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Difference between actual reserves and required reserves.
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Suppose the reserve requirement is 10 percent. If a bank has $5 million of checkable deposits and actual reserves of $500,000, the bank:
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Cannot safely lend out more money
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A reserve requirement of 20 percent means a bank must have $1,000 of reserves if its checkable deposits are:
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$5,000
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Suppose the reserve requirement is 20 percent. If a bank has checkable deposits of $4 million and actual reserves of $1 million, it can safely lend out:
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$200,000
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Suppose that a bank's actual reserves are $5 million, its checkable deposits are $5 million, and its excess reserves are $3 million. The reserve requirement must be:
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40 percent
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Assuming a legal reserve ratio of 20 percent, how much in excess reserves would this bank have after a check for $10,000 was drawn and cleared against it?
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$6,000
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The reserve ratio refers to the ratio of a bank's:
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Required reserves to its checkable-deposit liabilities.
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A commercial bank can expand its excess reserves by:
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demanding and receiving payment on an overdue loan
