Question

d. $200 reserve ratio is 5 percent and the bank has $1,000 in deposits. Its reserves amount to S5. S50. c. $95. d. $950 Suppose banks desire to hold no excess reserves and that the Fed has set a reserve requirement of 10 percent. If you deposit $9,000 into First Jayhawk Bank, a. First Jayhawk's required reserves increase by $900. b. First Jayhawk will be able to lend out $8,100 c. First Jayhawk's assets and liabilities both will increase by $9,000 d. All of the above are correct. 35. 36. In the special case of the 100 percent-reserve banking the money multiplier is 1 and banks create money a. 1 and banks do not create money 2 and banks create money b. c. d. 2 and banks do not create money 37. If the reserve ratio is 10 percent, the money multiplier is a. 100. b. 10. 38. If the central bank in some country lowered the reserve requirement, then the money multiplier for that country a. would increase. b. would not change. would decrease. c. d. could do any of the above. 39. When conducting an open- market,sale, the Fed a. buys govemment bonds, and in so doing increases the money supply b. buys govenment bonds, and in so doing decreases the money supply c. sells government bonds, and in so doing increases the money supply d. sells government bonds, and in so doing decreases the money supply 40. When conducting an open-markét purchasa, the Fed buys government bonds, and in so deing increases the money supply. a. b. buys government bonds, and in so doing decreases the money supply. c. sells government bonds, and in so doing increases the money supply d. sells government bonds, and in so doing decreases the money supply. Table 4-7 Price QuantityQuantity Demanded Supplied $10 $8 $6 10 20 30 60 45 30

Answer 1

Ans.34- (B)

35- (D)

36- (B)

37- (B)

38-(A)

39- (D)

40- (A)

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