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MONEY & BANKING EXAM 2-COMPREHENSIVE
Q&A FOR CERTIFICATION SUCCESS
If a bank has $100,000 of checkable deposits, a required reserve ratio of 20
percent, and it holds $40,000 in reserves, then the maximum deposit outflow it
can sustain without altering its balance sheet is? - correct-answer -$25,000
The excess reserve ratio is ____ related to expected deposit outflows and is _____
related to the market interest rate.
A. positively, negatively
B. positively, positively
C. negatively; negatively
D. negatively; positively - correct-answer -A
If a bank has ____ rate-sensitive assets than liabilities, a ______ in interest rates
will reduce bank profits, while a ____ in interest rates will raise bank profits
A. fewer, decline, decline
B.fewer, rise, rise
C. more, rise, decline
D. more, decline, rise - correct-answer -D
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Suppose, at a given federal funds rate, there is an excess demand for reserves in
the FFM. IF the Fed wants the FFR to stay at that level, then it should undertake an
open market ___ of bonds, everything else held constant. If the Fed does nothing,
however, the FFR will ____. - correct-answer -purchase; incrase
Suppose from a new checkable deposit, bank holds 8 million on deposit with
federal reserve, 9 million in excess and faces a required ratio of 10%. Given we can
say First national bank has ____ dollars in vault cash - correct-answer -2
Which is an entity of the FRS?
A. The FDIC
B. The comptroller of the Currency
C. The FOMC
D. The US treasury secretary - correct-answer -C
A $5 million deposit outflow from a bank has the immediate effect of:
A. reducing deposits and reserves by $5 million
B. reducing deposits and loans by $5 million
C. reducing deposits and securities by $5 million
D. reducing deposits and capital by $ 5 million - correct-answer -A
MONEY & BANKING EXAM 2-COMPREHENSIVE
Q&A FOR CERTIFICATION SUCCESS
If a bank has $100,000 of checkable deposits, a required reserve ratio of 20
percent, and it holds $40,000 in reserves, then the maximum deposit outflow it
can sustain without altering its balance sheet is? - correct-answer -$25,000
The excess reserve ratio is ____ related to expected deposit outflows and is _____
related to the market interest rate.
A. positively, negatively
B. positively, positively
C. negatively; negatively
D. negatively; positively - correct-answer -A
If a bank has ____ rate-sensitive assets than liabilities, a ______ in interest rates
will reduce bank profits, while a ____ in interest rates will raise bank profits
A. fewer, decline, decline
B.fewer, rise, rise
C. more, rise, decline
D. more, decline, rise - correct-answer -D
, 2|Page
Suppose, at a given federal funds rate, there is an excess demand for reserves in
the FFM. IF the Fed wants the FFR to stay at that level, then it should undertake an
open market ___ of bonds, everything else held constant. If the Fed does nothing,
however, the FFR will ____. - correct-answer -purchase; incrase
Suppose from a new checkable deposit, bank holds 8 million on deposit with
federal reserve, 9 million in excess and faces a required ratio of 10%. Given we can
say First national bank has ____ dollars in vault cash - correct-answer -2
Which is an entity of the FRS?
A. The FDIC
B. The comptroller of the Currency
C. The FOMC
D. The US treasury secretary - correct-answer -C
A $5 million deposit outflow from a bank has the immediate effect of:
A. reducing deposits and reserves by $5 million
B. reducing deposits and loans by $5 million
C. reducing deposits and securities by $5 million
D. reducing deposits and capital by $ 5 million - correct-answer -A
