Eco 4223 Final Exam Questions And
Answers With Verified Solutions Already
Passed 100% Correct!!!
If currency held by the public equals $100 billion, reserves held by banks equal
$50 billion, and bank deposits equal $500 billion, then the money supply equals:
A. 150 billion
B. 650 Billion - ANSWER✔✔ A
In a system with fractional-reserve banking:
A. All banks must hold reserves equal to a fraction of their loans
B. All banks must hold reserves equal to a fraction of their deposits -
ANSWER✔✔ B
In a 100% reserve banking system, if a customer deposits $100 currency into a
bank, then the money supply:
A. increases $100
B. remains the same - ANSWER✔✔ B
If the ratio of reserves to deposits (rr) increases, while the ratio of currency to
deposits (cr) is constant, and the monetary base (B) is constant, then:
A. The money supply increases
B. The money supply decreases - ANSWER✔✔ B
To reduce the money supply, the Fed:
A. buys government bonds
B. sells government bonds - ANSWER✔✔ B
, When the Fed makes and open-market sale, it:
A. increases the monetary base
B. decreases the monetary base - ANSWER✔✔ B
To prevent banks from using excess reserves to make loans that would increase
the money supply, the Fed could conduct open-market and the
interest rate paid on bank reserves:
A. Sales; raise
B. purchases; lower - ANSWER✔✔ A
If the fed wishes to increase the money supply it should:
A. decrease the discount rate
B. increase the discount rate - ANSWER✔✔ A
Direct loans made to member banks by the Fed are called:
A. discount loans
B. federal funds loans - ANSWER✔✔ B
The interest rate charged on loans by the Federal Reserve to banks is called:
A. Federal funds rate
B. Discount rate - ANSWER✔✔ B
If the monetary base fell and the currency-deposit ratio rose, but the reserve ratio
remained the same, then:
Answers With Verified Solutions Already
Passed 100% Correct!!!
If currency held by the public equals $100 billion, reserves held by banks equal
$50 billion, and bank deposits equal $500 billion, then the money supply equals:
A. 150 billion
B. 650 Billion - ANSWER✔✔ A
In a system with fractional-reserve banking:
A. All banks must hold reserves equal to a fraction of their loans
B. All banks must hold reserves equal to a fraction of their deposits -
ANSWER✔✔ B
In a 100% reserve banking system, if a customer deposits $100 currency into a
bank, then the money supply:
A. increases $100
B. remains the same - ANSWER✔✔ B
If the ratio of reserves to deposits (rr) increases, while the ratio of currency to
deposits (cr) is constant, and the monetary base (B) is constant, then:
A. The money supply increases
B. The money supply decreases - ANSWER✔✔ B
To reduce the money supply, the Fed:
A. buys government bonds
B. sells government bonds - ANSWER✔✔ B
, When the Fed makes and open-market sale, it:
A. increases the monetary base
B. decreases the monetary base - ANSWER✔✔ B
To prevent banks from using excess reserves to make loans that would increase
the money supply, the Fed could conduct open-market and the
interest rate paid on bank reserves:
A. Sales; raise
B. purchases; lower - ANSWER✔✔ A
If the fed wishes to increase the money supply it should:
A. decrease the discount rate
B. increase the discount rate - ANSWER✔✔ A
Direct loans made to member banks by the Fed are called:
A. discount loans
B. federal funds loans - ANSWER✔✔ B
The interest rate charged on loans by the Federal Reserve to banks is called:
A. Federal funds rate
B. Discount rate - ANSWER✔✔ B
If the monetary base fell and the currency-deposit ratio rose, but the reserve ratio
remained the same, then:
