ECN 211 Exam Questions With
100% Correct Answers
Which list ranks assets from most to least liquid? - Answer currency, demand deposits,
money market mutual funds
Banks are able to create money only when - Answer only a fraction of deposits are held
in reserve
To increase the money supply, the Fed can - Answer buy government bonds or
decrease the discount rate.
If the reserve ratio is 10 percent, $1,400 of additional reserves can create up to -
Answer $14,000 new money
On a bank's T-account, which are part of the bank's assets? - Answer reserves but not
deposits made by its customers
As the reserve ratio decreases, the money multiplier - Answer increases
If a bank has a reserve ratio of 8 percent, then - Answer the bank keeps 8 percent of its
deposits as reserves and loans out the rest.
The agency responsible for regulating the money supply in the United States is -
Answer The Federal Reserve
In a fractional-reserve banking system, a bank - Answer keeps only a fraction of its
deposits in reserve.
If the discount rate is raised then banks borrow - Answer less from the Fed so reserves
decrease.
Paper dollars - Answer are fiat money and gold coins are commodity money
If the Federal Open Market Committee decides to decrease the money supply, it will -
Answer sell government bonds.
Which of the following entities actually executes open-market operations? - Answer the
New York Federal Reserve Bank
100% Correct Answers
Which list ranks assets from most to least liquid? - Answer currency, demand deposits,
money market mutual funds
Banks are able to create money only when - Answer only a fraction of deposits are held
in reserve
To increase the money supply, the Fed can - Answer buy government bonds or
decrease the discount rate.
If the reserve ratio is 10 percent, $1,400 of additional reserves can create up to -
Answer $14,000 new money
On a bank's T-account, which are part of the bank's assets? - Answer reserves but not
deposits made by its customers
As the reserve ratio decreases, the money multiplier - Answer increases
If a bank has a reserve ratio of 8 percent, then - Answer the bank keeps 8 percent of its
deposits as reserves and loans out the rest.
The agency responsible for regulating the money supply in the United States is -
Answer The Federal Reserve
In a fractional-reserve banking system, a bank - Answer keeps only a fraction of its
deposits in reserve.
If the discount rate is raised then banks borrow - Answer less from the Fed so reserves
decrease.
Paper dollars - Answer are fiat money and gold coins are commodity money
If the Federal Open Market Committee decides to decrease the money supply, it will -
Answer sell government bonds.
Which of the following entities actually executes open-market operations? - Answer the
New York Federal Reserve Bank
