The US Banking System 3e by Center for Financial Training - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below 1. The flow of money has a direct effect on how the economy performs. a. True b. False ANSWER: True POINTS: 1 LEARNING OBJECTIVES: …
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The US Banking System 3e by Center for Financial Training – Test Bank
Instant Download – Complete Test Bank With Answers
Sample Questions Are Posted Below
1. The flow of money has a direct effect on how the economy performs.
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2. Liquidity is variable, depending on the nature of the asset.
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3. MZM is sometimes referred to as the “base” money supply.
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4. The agreed-upon value of money in the United States today is based on the government’s supply of gold at Fort Knox, Kentucky.
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5. Banks can loan customers the money they have on deposit, minus the reserve requirement.
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6. A bank may not use secondary reserves to give depositors their money back if they demand it.
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7. Most large money transactions involve ledger entries rather than the movement of physical currency.
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8. A dollar bill represents an obligation of the government to provide something of value to you.
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9. Generally speaking, when interest rates are high more credit is accessible and the economy tends to grow quickly.
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10. The prime rate is usually the same among major banks.
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11. If there is too much money moving in the economy
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12. Which of the following assets is the most liquid?
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13. Which of the following elements of the money supply, as defined by the Federal Reserve, can be spent immediately?
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14. The official currency of the United States can properly be classified as
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15. Which of the following is NOT considered a factor in money creation?
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16. Which of the following would be considered a secondary reserve for a bank?
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17. Money on deposit, minus ____________________, can be loaned by banks to customers.
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18. If banks must hold more money in reserve,
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19. The interest rate the Federal Reserve charges for loans to member banks is called the
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20. The Federal Reserve influences the federal funds rate by
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21. The ____________________ supply is defined as the liquid assets held by banks and individuals.
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22. The measure of how quickly things may be converted to something of value is called ____________________.
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23. ____________________ was a measure of the money supply in use from 1971 until 2006.
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24. ____________________ measures are tools used to estimate the size of the money supply.
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25. ____________________ money is based on some item of value, such as gold or precious stones.
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26. ____________________ money is money that is deemed legal tender by a government.
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27. Resources a bank uses to create money through its business transactions are called ____________________ reserves.
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28. The ____________________ effect is a phenomenon that creates new deposits from lending.
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29. The federal ____________________ rate is the amount of interest charged for short-term, interbank loans.
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30. The ____________________ rate is the interest rate the Federal Reserve sets and charges for loans to member banks.
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31. Barry earns a monthly income of $2,500. He receives a 12 percent raise. What is his monthly income now?
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32. Suppose the total amount of currency (i.e., Federal Reserve notes and coins) in circulation today is $713 billion. If 95 percent of this amount consists of Federal Reserve notes, what amount of currency in circulation consists of coins?
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33. Suppose the Fed requires all banks to hold a reserve of 4 percent on the first $45 million of customer deposits, and 10 percent on all deposits above that. If a bank has $100 million on deposit, what is the amount of the reserve requirement?
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34. Suppose the Fed requires all banks to hold a reserve of 5 percent on the first $60 million of customer deposits, and 12 percent on all deposits above that. If a bank has $125 million on deposit, what is the amount of the reserve requirement?
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35. Calculate the total amount of money “created” from a deposit of $10,000 as it moves through four cycles of deposit. Assume a reserve rate of 12 percent. (Round answer to nearest two decimal places.)
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36. Calculate the total amount of money “created” from a deposit of $5,000 as it moves through four cycles of deposit. Assume a reserve rate of 15 percent. (Round answer to nearest two decimal places.)
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37. What types of money and circumstances of liquidity are defined by the M2 element of the money supply?
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38. You cannot take a Federal Reserve note to a bank and exchange it for gold or silver. Why not?
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39. Why does the Federal Reserve require banks to hold money in reserve?
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40. What happens to the money supply if the Fed lowers reserve requirements? Why?
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41. What “thing of value” does the government provide those who hold United States currency?
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42. What is the prime rate?
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43. Why might extra money in the economy cause inflation?
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44. What is a fractional-reserve system? What is its relationship to the money supply in the United States?
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45. Name and distinguish between the three types of reserves held by banks.
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46. Briefly describe the main factors affecting interest rates other than the actions of the Federal Reserve.
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47. Why did the Fed lower the federal funds rate seven times between 2006 and 2008?
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48. Name the goals of the Federal Reserve’s monetary policy and the tools it uses to achieve its goals.
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49. Explain how the Federal Reserve affects the federal funds rate.
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50. How does the discount rate differ from the prime rate?
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Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
