1.The Fed purchases $100,000 of U.S. government securities from One Bank. Assuming the desired reserve ratio...
1.The Fed purchases $100,000 of U.S. government securities from One Bank. Assuming the desired reserve ratio is 10 percent, banks loan all excess reserves, and the currency drain is 20 percent, how much does the quantity of money increase?
A. $1,000,000
B. $10,000,000
C. $1,100,000
D. $900,000
E. $100,000
2.A bank maximizes its stockholders' wealth by ______.
A. colluding with other banks to keep interest rates high colluding with other banks to keep interest rates high
B. lending for long terms at high interest rates and borrowing from depositors and others
C. lobbying the Federal Reserve to keep the interest rate high lobbying the Federal Reserve to keep the interest rate high
D. charging exorbitant feescharging exorbitant fees
E. making risky business loan smaking risky business loans
3.When the Fed sells government securities to banks, the sale
A. creates more excess reserves.
B. decreases banks' reserves.
C. increases banks' reserves.
D. increases the monetary base.
E. increases the quantity of money.
3.A bank has the following deposits and assets: Checkable deposits, $380 Currency, $2 Savings deposits, $1,360 Small time deposits, $700 Outstanding credit card balances, $325 Government securities, $200 Reserve account at the Fed, $8 Loans to businesses, $1,913 Calculate the amount of bank loans, securities, and reserves.
Bank loans are （？）. Bank securities are （？）. Bank reserves are （？）.
The institutions that make up the banking system are ______.
A. the Federal Reservethe Federal Reserve, thrift institutionsthrift institutions, money market funds money market funds, and commercial bankscommercial banks
B. the U.S. Treasurythe U.S. Treasury, thrift institutionsthrift institutions, the world gold marketthe world gold market, and commercial bankscommercial banks
C. the Federal Reservethe Federal Reserve, the Chicago Mercantile Exchangethe Chicago Mercantile Exchange, thrift institutionsthrift institutions, and money market funds money market funds
D. the Federal Reservethe Federal Reserve, the world gold marketthe world gold market, commercial bankscommercial banks, and the New York Stock Exchangethe New York Stock Exchange
E. the U.S. Treasurythe U.S. Treasury, the Chicago Mercantile Exchangethe Chicago Mercantile Exchange, the world gold marketthe world gold market, and the New York Stock Exchange
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