quiz 12ma - a. The money supply immediately increases by...

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Quiz 12 (29) 1. Governments typically regulate banks closely because: a. Bankers are inherently untrustworthy b. Banks hold most of the people’s money c. Most banks are monopolies in their communities d. Banks’ balance sheets are often out of balance 2. In the U.S., money: a. Is a medium of exchange b. Includes banks’ deposits plus currency in their vaults c. Includes the amounts owed on credit cards d. Is safest when it has its own commodity value 3. According to the accounts kept by banks: a. Excess Reserves=Reserves – Loans b. Deposits = Required Reserves + Excess Reserves c. Liabilities = Assets + Net Worth d. Assets = Liabilities + Net Worth 4. When banks’ required reserves ratios are cut, they normally: a. Reduce their loans b. Increase their loans c. Reduce their deposits d. Reduce their net worth 5. When a person deposits $1,000 cash into a bank:
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Unformatted text preview: a. The money supply immediately increases by $1,000 b. The money supply initially falls by $1,000 c. The money supply is initially unchanged, but eventually grows by $1,000 d. The money supply is initially unchanged, but eventually grows by more than $1,000 6. Where m is the reserve ratio, the simplified multiplier formula is: a. Change in deposits = (1/m) x change in reserves b. Change in money = (1/m) x change in reserves c. Change in loans = (1/m) x change in reserves d. Change in excess reserves = (1/m) x change in reserves 7. If they were left unregulated, banks would probably: a. Operate without a reserve ration b. Refuse to create money c. Change the money supply in ways that made the business cycle worse d. Operate so conservatively that ordinary people would lack access to loans...
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This note was uploaded on 09/09/2008 for the course ECON 202 taught by Professor Fernandez during the Fall '08 term at University of Louisville.

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quiz 12ma - a. The money supply immediately increases by...

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