ECON 1500 Exam 2 Tyler Bowles
Questions and Answers| Updated
The Financial Sector
facilities trade and specialization
Rich nations:
Typical have a lot of capital, specialize and trade.
They need a banking system
Money:
Serves as the medium of exchange
It is NOT: eliminates the need to specialize, is a liability when owned by a college
student.
According to T. Bowles, which of the following should be included in the list of
great intellectual achievements of the humans?
Fractional Reserve Banking
Which of the following is in the correct historical order?
A. Barter, fiat money, commodity money, hard money.
B. Fractional reserve banking, commodity money, fiat money.
C. Barter, commodity money, hard money, fiat money.
,D. Medium of exchange, commodity money, hard money, fiat money.
Answer is c. Barter, commodity money, hard money, fiat money
If one U.S. dollar could be exchanged for a fixed amount of gold, the dollar
would be:
Hard money
Assume Olga has 10 pounds of gold and issues 10 one-pound notes, each
redeemable for a pound of gold. Olga is:
Issuing hard Money
Assume Olga has 20 pounds of gold and issues 100 one-pound notes, each
redeemable for a pound of gold. Olga is:
engaging in fractional reserve banking with a 20 percent ratio?
Funds in your checking account:
It would be included in your list of assets, is a medium of exchange, is a part of the
M1 money supply.
Which of the following is a typical bank asset?
reserves, loans to customers.
In the U.S., which of the following holds banks' reserves?
, The federal reserve
The Federal Reserve changes bank reserves and hence the money supply by:
It is NOT changing the fees in charges to audit banks.
it is buying and selling assets to banks, changing the interest rete it pays on
reserves.
If the reserve ratio is 100 percent, and banks keep no excess reserves, a new
deposit of freshly $20,000 will add _________ to the money supply:
20,000.
If the reserve ratio is 20 percent, a new deposit of freshly printed $2,000 will add
_________ to the money supply:
10,000
Assume Trump Bank has a reserve ratio of 20 percent. If a new customer, K.
Harris, deposits $10 million, Trump Bank can make a maximum new loan of:
8 million.
A bank applies a reserve ratio of 0.10. If it has demand deposits of $100,000 and
is holding $10,000 in reserves:
The bank is meeting its reserve requirement.
When a bank loans out excess reserves, the money supply:
Increases.
Questions and Answers| Updated
The Financial Sector
facilities trade and specialization
Rich nations:
Typical have a lot of capital, specialize and trade.
They need a banking system
Money:
Serves as the medium of exchange
It is NOT: eliminates the need to specialize, is a liability when owned by a college
student.
According to T. Bowles, which of the following should be included in the list of
great intellectual achievements of the humans?
Fractional Reserve Banking
Which of the following is in the correct historical order?
A. Barter, fiat money, commodity money, hard money.
B. Fractional reserve banking, commodity money, fiat money.
C. Barter, commodity money, hard money, fiat money.
,D. Medium of exchange, commodity money, hard money, fiat money.
Answer is c. Barter, commodity money, hard money, fiat money
If one U.S. dollar could be exchanged for a fixed amount of gold, the dollar
would be:
Hard money
Assume Olga has 10 pounds of gold and issues 10 one-pound notes, each
redeemable for a pound of gold. Olga is:
Issuing hard Money
Assume Olga has 20 pounds of gold and issues 100 one-pound notes, each
redeemable for a pound of gold. Olga is:
engaging in fractional reserve banking with a 20 percent ratio?
Funds in your checking account:
It would be included in your list of assets, is a medium of exchange, is a part of the
M1 money supply.
Which of the following is a typical bank asset?
reserves, loans to customers.
In the U.S., which of the following holds banks' reserves?
, The federal reserve
The Federal Reserve changes bank reserves and hence the money supply by:
It is NOT changing the fees in charges to audit banks.
it is buying and selling assets to banks, changing the interest rete it pays on
reserves.
If the reserve ratio is 100 percent, and banks keep no excess reserves, a new
deposit of freshly $20,000 will add _________ to the money supply:
20,000.
If the reserve ratio is 20 percent, a new deposit of freshly printed $2,000 will add
_________ to the money supply:
10,000
Assume Trump Bank has a reserve ratio of 20 percent. If a new customer, K.
Harris, deposits $10 million, Trump Bank can make a maximum new loan of:
8 million.
A bank applies a reserve ratio of 0.10. If it has demand deposits of $100,000 and
is holding $10,000 in reserves:
The bank is meeting its reserve requirement.
When a bank loans out excess reserves, the money supply:
Increases.
