Question

10. Al Fed purchases and sales of A corporate stocks and bonds are conducted at the New York Fed's trading desk. B. government bonds are conducted at the New York Fed's trading desk. c real estate and other real assets are conducted by the Federal Open Market Committee D. All of the above are correct. E A and C, only 11. Under a fractional reserve banking system, A banks hold required reserves but generally lend out a majority of their excess reserves B banks can increase money by lending out excess reserves c. banks hold only a fraction of deposits as reserves D. All of the above E A and C, only 12. A bank loans $75,000 to Dora's Dress Shop for the remodel of a building that Dora's wants to use as a new store. On their respective balance sheets, this loan is a A liability for the bank and an asset for Dora's Dress Shop The loan does not increase the money supoly B liability for Dora's Dress Shop and an asset for the bank. The loan does not increase the money supply c lability for the bank and an asset for Dora's Dress Shop. The loan increases the money supply D labey for the bank and an asset for Dora's Dress Shop. The loan decreases the money supply E liability for Dora's Dress Shop and an asset for the bank. The loan increases the money supply 13. In a system of 100 percent-reserve banking, the purpose of a bank is to A buy and sell gold B make loans to households. C. influence the money supply. D give depositors a safe place to keep their money. E keep the water from running into the house

Answer 1

Ans 10)

Option B is correct as fed bank purchased or sells government bonds to influence money supply.

Ans 11)

Option C is correct

Banks accept deposits and lend loans in which fraction of deposits are kept as reserves

Hence option C is correct

Ans 12)

Option E is correct

Loan lent is an asset for bank and Loan taken is a liability for shop

Hence option E is correct

Ans 13)

Option C is correct