Chapter 32 quiz

chapter 32 quiz
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Unformatted text preview: 1. Answer the next question(s) on the basis of the following table for a commercial bank or thrift: Refer to the above table. When the legal reserve ratio is 30 percent, the monetary multiplier is: A) 5. B) 4. C) 3.33. D) 2.5. Refer to row 1 in the above table. The number appropriate for space W is: A) 4. B) 6. C) 10. D) 12. 3. Individual commercial banks are limited in their ability to create money by lending because: A) lending is likely to result in the loss of reserves to other banks. B) only the Treasury and the Federal Reserve Banks are authorized to create new money. C) the Board of Governors prohibits bank lending when the result is an expansion of the money supply. D) banking is a highly competitive industry. 4. Commercial banks monetize claims when they: A) collect checks through the Federal Reserve System. B) make loans to the public. C) accept repayment of outstanding loans. D) borrow from the Federal Reserve Banks. 5. (Last Word) The bank panics of 1930-1933: A) resulted in the passage of the Smoot-Hawley Act.A) resulted in the passage of the Smoot-Hawley Act....
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