A. Required reserves are a set percentage of total reserves that must be held in cash in a bank's vault or in the bank’s reserve account at the Fed.
True |
False |
B. To a bank, a checkable deposit is classified as
an asset. |
a liability. |
vault cash. |
excess reserves. |
bank capita |
C. Money is an invention of government.
True |
False |
D. Which of the following statements is true?
A savings deposit is not counted in the most basic, or narrow, definition of the money supply. |
M1 is sometimes referred to as transactions money. |
Money reduces the transaction costs of making exchanges. |
b and c |
a, b, and c |
A. True, that it is statutory liquid ratio.
B. Liability - it is a liability for a bank, because owner csn anytime withdraw it from the bank. For the owner, its an asset.
C.True, lydians were the first to invent coins and by government fiat or decree, the money is valued. So the value is given by govt.
D. A, b and c are all true. They are all based on measures of money supply- M1, M2, M3 and M4.
A. Required reserves are a set percentage of total reserves that must be held in cash...
The balance sheet for the newly formed Last National Bank is shown below. The reserves listed on the balance sheet are reserves on deposit at the Federal Reserve. The cash is vault cash held at the bank.Last National Bank Balance Sheet 1 Cash - $15,000Reserves - $102,000Property - $309,000Checkable deposits - $116,000Shock Shares - $310,000Instructions: Enter your answers as whole numbers. a. Suppose a depositor at the bank writes a check for $26,500 to a contractor to pay for some remodeling work done on her...
The balance sheet for the newly formed ACME Bank is shown below. The reserves listed on the balance sheet are reserves on deposit at the Federal Reserve. The cash is the vault cash held in the bank. Instructions: Enter your answers as whole numbers. a. Fill in the missing value in the balance sheet.ACME Bank Balance SheetAssets Cash - $12,000Reserves - $150,000Property - ?Liabilities and Net WorthCheckable deposits - $140,000Shock Shares - $240,000b. If the reserve requirement is 12 percent, how much in excess reserves is the...
1) Suppose the Fed's required reserve ratio (REQ) is 20%. Further suppose that the Fed buys $100 million of U.S. Treasury securities from a dealer, Mary Jones, who deposits the check, which is drawn on the Fed, in her bank. This deposit increases her bank's reserve account (∆R) with the Fed by $100 million as well as its demand deposits, its total reserves, and the overall level of M1. What is the money multiplier?1) Suppose the Fed's required reserve ratio...
The reserve requirement sets the required percentage of vault cash plus deposits with the regional Federal Reserve Banks that banks must keep for their deposits. Many banks have widespread branches and ATMs. How would the existence of branches and ATMs affect the level of excess reserves (above those required) that banks are able to hold? ATMs require a lot of vault cash, thus increasing excess reserves. ATMs increase excess reserves, which increases the money multiplier. The existence of ATMs does...
QUESTION 4 4. Match the circumstances of the Federal Reserve banknotes to their changing meaning or role When held by the public A medium of exchange - money When in the private bank vault B. reserves When back at the Federal Reserve C. trash QUESTION 5 5. Match the terms to their definition the amount of reserves the private bank is required to hold - determined by A. multiplying the total checkable account liabilities of the bank by th required...
QUESTION 1 Commercial bank reserves held at a Federal Reserve Bank are a liability of the commercial bank and an asset of the Federal Reserve. True False QUESTION 2 During normal economic times, the Federal Reserve has primarily influenced overall financial conditions by adjusting the federal funds rate. The Fed Funds rate is the rate the U.S. Government charges banks for short term credit. True False QUESTION 3 Everything else held constant, a decrease in holdings of excess reserves will...
The balance sheet for the newly formed Last National Bank is shown below. The reserves listed on the balance sheet are reserves on deposit at the Federal Reserve. The cash is vault cash held at the bank. Last National Bank Balance Sheet 1 Liabilities and net worth Assets Cash $ 8,000 Checkable $ 138,000 $ deposits 140,000 Stock shares 295,000 $ Reserves Property 305,000 $ Instructions: Enter your answers as whole numbers. a. Suppose a depositor at the bank writes...
Suppose that Mountain Star Bank discovers that its reserves will temporarily fall slightly below those legally required. How might it temporarily remedy this situation through the Federal funds market? Now assume Mountain Star finds that its reserves will be substantially and permanently deficient. What remedy is available to this bank? How would a decrease in the reserve requirement affect the (a) size of the money multiplier, (b) amount of excess reserves in the banking system, and (c) extent to which...
ommercial Bank has $5,000 in excess reserves, $90,000 in checkable deposit and the reserve ratio is 30 percent. The bank must have: A. $35,000 in reserves. B. $32,000 in reserves. C. $10,000 in reserves. D. 15,000 in reserves 23. Suppose a commercial bank has checkable deposits of $100,000 and the legal reserve ratio is A. are $17,000. 10 percent. If this bank has $ 17,000 in reserves, then its excess reserves: B. are $10,000. C. are $7,000. D. are $1,700...
When can a bank make loans? a. when it has the minimum amount of required reserves b. only when it is confident that it can meet all the cash needs of depositors c. only when it has deposited all cash at the Federal Reserve d. when it has reserves greater than the amount of required reserves e. There is not enough information to solve this problem. 37. In a fractional reserve banking system, banks a. are able to create money...