CHAPTER 14 - CHAPTER 14 1. Which of the following...

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CHAPTER 14 1. Which of the following statements is not correct? A) The actual reserves of a commercial bank equal its excess plus its required reserves. B) A bank's assets plus its net worth equal its liabilities. C) When borrowers repay bank loans, the supply of money is reduced. D) A single commercial bank can safely lend an amount equal to its excess reserves. Ans: B 2. A bank which has assets of $85 billion and a net worth of $10 billion must have: A) liabilities of $75 billion. B) excess reserves of $10 billion. C) liabilities of $10 billion. D) excess reserves of $75 billion. Ans: A 3. The reserves of a commercial bank consist of: A) the amount of money market funds it holds. B) deposits at the Federal Reserve Bank and vault cash. C) government bonds which the bank holds. D) the bank's net worth. Ans: B 4. The ABC Commercial Bank has $5,000 in excess reserves and the reserve ratio is 30 percent. The bank must have: A) $90,000 in outstanding loans and $35,000 in reserves. B) $90,000 in demand deposit liabilities and $32,000 in reserves.
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This note was uploaded on 10/15/2009 for the course ECON 2302 taught by Professor Parker during the Spring '09 term at University of Texas-Tyler.

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CHAPTER 14 - CHAPTER 14 1. Which of the following...

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