drill and practice lesson 11 - (1)The money multiplier...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
(1)The money multiplier process also works in reverse when a loan is repaid since fewer checkable funds are then available to generate excess reserves. True As a result of the rising interest rates in this example, Businesses had to reduce their Investment Spending on _____________________. A improved products, training and facilities 3)Most of a bank’s loans are made to its own customers and are deposited in their ________________. A checking accounts (4)The purpose of the legal reserve is to guarantee the solvency (avoid the bankruptcy) of a bank. False In the longer run one of the risks of the Fed’s “tight money” approach is that ___________________________ because of the declining productivity caused by the forced reductions in Investment Spending. A people’s standard of living may be reduced (6)Banks play a very important role by providing savers a channel for their funds to be deposited and held safely while at the same time providing those funds as investment into the process of economic growth. True (7)________________ invested or made loans with 95 percent of the deposits that were being held. D Goldsmiths (8)A bank becomes a “going concern” (operating business) after meeting all regulatory requirements of the federal and state governments and the _______________. D Federal Reserve (9)The equation of Legal Reserves - Required Reserves = ____________ Reserves describes the relationships of fractional reserve banking.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
A Excess (10)The process of controlling the money supply is a tremendous responsibility for the Fed since the health of the ___________ is at stake.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 02/04/2011 for the course ECON 1110 taught by Professor Amy during the Fall '09 term at University of North Texas Health Science Center.

Page1 / 6

drill and practice lesson 11 - (1)The money multiplier...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online