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1) If the reserve ratio desired by banks is 0.1, then an open market Fed purchase of $10,000 will
increase the money supply by $100,000
increase the money supply by $5,000
decrease the money supply by $100,000
decrease the money supply by $10,000
2) the required reserve ratio specifies the ratio of reserves to
vault cash
the total money supply
loans
deposits
3) the balanced budget multiplier is less than 1, if
prices are variable
if the government maintains a balanced budget
if G rises and T falls equally
4) if a bank that was previously loaned up receives a deposit of $1,000 and the required reserve ratio is 0.2, then the maximum amount by which total deposits in the economy can increase is
$800
$75
$80
$25
5) if the banking system gets $1,000 in new reserves from the Fed and the required reserve ratio is 0.2, then the maximum amount by which total deposits in the economy can increase is
$5,000
$4,000
$2,500
$80
6) if the required reserve ratio is 0.1 and the reserve ratio that banks desire to maintain is 0.2, then the deposit multiplier is
6.67
10
8.3
5
7) if the government borrows more money
U.S. bond prices rise
U.S. interest rates rise
demand for U.S. government bonds rises
all of the above
8) a bank account that can be accessed by writing a check is called a
demand deposit
cash deposit
savings deposit
automatic deposit
9) an increase in market interest rates will
reduce prices of all bonds
reduce prices of government bonds
reduce prices of municipal bonds
increase prices of all bonds
10) the central bank of the United States is the
FDIC
Federal Reserve System
Bank of America
Bank of the United States
11) If the minimum reserve requirement ratio is 0.2, then an open market Fed sale of $10,000 will
increase the money supply by $100,000
decrease the money supply by $100,000
increase the money supply by $10,000
decrease the money supply by $50,000
12) suppose the balanced budget multiplier is one, then it will be less than one if
savings are close to zero
if prices are not constant
if G rises and T falls equally
13) if the banking system gets $1,200 in new reserves from the Fed and the required reserve ratio is 0.2, then the maximum amount by which total deposits in the economy can increase is
$5,000
$6,000
$2,500
$80
14) if the bank that was previously loaned up receives a deposit of $1,200 and the required reserve ratio is 0.2, then the maximum amount of this $1,200 that the bank can lend is
$800
$960
$80
$240
15) if the required reserve ratio is 0.1 and the reserve ratio that banks desire to maintain is 0.25, then the deposit multiplier is
6.67
10
4
5
16) if inflation is strong, then the right Fed policy is to
sell government bonds
lower U.S. interest rates
both a and b
17) if the wage gap rises,
debt must rise to preserve jobs
profits go up
all of the above
both a and b
18) Monetary base includes
cash held by the people
cash held by the federal government
cash held by banks
all of the above
19) If the U.S. trade deficit rises, and foreign investment rises as a result then
U.S. bond prices rise
U.S. interest rates fall
demand for U.S. government bonds rises
all of the above
20) M 1 includes
cash held by the people
cash held by the federal government
cash held by the government of Dallas
All of the above
21) If the banking system gets $1500 in new reserves from the Fed & the required-reserve ratio is 0.25, then the maximum amount by which total loans in the economy can increase is
$6,000
$4,500
1500/0.25 - 1500(0.25)
6000-375 -->can only loan 75% of this
$4,800
22) If a bank that was previously loaned up receives a deposit of $1000, its own reserve requirement ratio is 0.3 and the required-reserve ratio is 0.25, then the maximum amount of this $1,000 that this bank will lend is
$800
$750
$700
$200
23) If the banking system gets $1000 in new reserves from the Fed and the required-reserve ratio is 0.25, then the maximum amount by which total deposits in the economy can increase is
$6000
$5000
2500
4000
1000/.25=4000
24) If the required reserve ratio is 0.1 and the reserve ratio that banks desire to maintain is 0.2, then the deposit multiplier is
3
10
10/3
5
1/0.2
25) If inflation is strong, then the right Fed policy is to
sell government bonds
raise US interest rates
both a and b
inflation is strong -->sell bonds to decrease MS
Raise US interest rates, lower inflation
26) A bank account that can be accessed by writing a check is called
demand deposit
cash deposit
savings deposit
automatic deposit
27) An increase in market interest rates will
reduce prices of all bonds
reduce prices of government bonds
reduce prices of municipal bonds
increase prices of all bonds
28) The central bank of the United States is the.
FDIC
Federal Reserve System
c Bank of America .
Bank of the United States
29) suppose the balance budget multiplier is one, the it will be greater than one if
