Question

9 In the U.S econormy the money supply is cot A) U.S Treasury. B) Federal Reserve System D) Senate Committee on Banking and Finance. 10. Ceteris paribus, if the Fed raised the required reserve ratio A) Banks could increase their lending B) The Federal funds interest rate would rise. The size of the monetary multiplier would decrease. D) The size of the monetary multiplier would increase. 11. Money is created when A) Loans are made. Checks written on one bank are deposited in another bank. Loans are repaid. B) C) D) The net worth of the banking system declines 12. Money is destroyed when A) Loans are made. B) Checks written on one bank are deposited in another bank C) Loans are repaid. D) The net worth of the banking system declines. 13. Other things equal, if the required reserve ratio was lowered Banks would have more excess reserves. A) B) The size of the monetary multiplier would increase. C) The money supply would increase. D) All of the above. 14. The three main tools of monetary policy are: A) Tax rate changes, the discount rate, and open-market operations. B) Tax rate changes, changes in government expenditures, and open-market operations C) The discount rate, the reserve ratio, and open-market operations. D) Changes in government expenditures, the reserve ratio, and the discount rate. 15. In a fractional reserve banking system A) Bank panics cannot occur B) The monetary system must be backed by gold C) Banks can create money through the lending process D) The Federal Reserve has no control over the amount of money in circulation. 16. Excess reserves refer to the: A) Difference between a bank's vault cash and its reserves deposited at the Federal Reserve Bank B) Minimum amount of actual reserves a bank must keep on hand to back up its depo C) Difference between actual reserves and loans. D) Difference between actual reserves and required reserves