Chapter 15

Chapter 15 - Chapter 15 Exercise: . Key terms 1. Discount...

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Chapter 15 Exercise: . Key terms 1. Discount Rate 2. Discount Rate 3. Float 4. Multiple Deposit Creation 5. Open Market Operations 6. Open Market Purchase 7. Open Market Sale 8. Required Reserves 9. Reserves 10. Simple Deposit Multiplier Simle deposit multiplier .Multiple Choice 1. Consider an example in which Fleet Bank initially holds no excess reserves and then gains $100 in additional deposits. If the required reserve ratio is 10%, as it is in the US today, what is the maximum amount that Fleet can use to make new loans, while still satisfying its reserve requirement? a. $0. b. $10. c. $90. d. $100. 2. Suppose that Fleet Bank borrows $100 million from Citibank in the Federal Funds market.Then this interbank loan is: a. A liability for Fleet and a liability for Citibank. b. A liability for Fleet and an asset for Citibank. c. An asset for Fleet and a liability for Citibank. d. An asset for Fleet and an asset for Citibank. 3. The four players in the money supply process include a. banks, depositors, borrowers, and the U.S. Treasury. b. banks, depositors, the central bank, and the U.S. Treasury. c. banks, depositors, the central bank, and borrowers. d. banks, borrowers, the central bank, and the U.S. Treasury. 4. Which of the following are depository institutions? a. Commercial banks b. Credit unions c. Federal Reserve banks d. All of the above e. Only (a) and (b) of the above 5. Borrowers from depository institutions include a. individuals who borrow from credit unions. b. institutions that borrow from banks. c. institutions that issue bonds purchased by savings and loan associations. d. all of the above. e. only (a) and (b) of the above.
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6. Both _____ and _____ are Federal Reserve assets. a. currency in circulation; discount loans b. currency in circulation; government securities c. government securities; discount loans d. government securities; bank reserves e. discount loans; bank reserves 7. Both _____ and _____ are monetary liabilities of the Fed. a. government securities; discount loans b. currency in circulation; bank reserves c. government securities; bank reserves d. discount loans; bank securities e. discount loans; currency in circulation 8. The monetary base consists of a. currency in circulation and Federal Reserve notes. b. currency in circulation and government securities. c. currency in circulation and reserves.
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Chapter 15 - Chapter 15 Exercise: . Key terms 1. Discount...

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