mt3fall3 - ECO 2013-02 Third Midterm, 19 November 2003 Dr....

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ECO 2013-02 Third Midterm, 19 November 2003 Dr. Cobbe Name __________________________________________________ Bubble in on scantron NAME, SOCIAL SECURITY #, and BEST response to each question. You may write on the questions. This test consists of 60 questions. In taking this test, I certify that I have complied fully with the FSU Student Academic Honor Code. Signature ______________________________________________________ 1) Which of the following is NOT an asset of the Federal Reserve? A) gold B) U.S. government securities C) banks' deposits at the Fed D) loans to banks 2) One of the Fed's assets is A) Federal Reserve notes. B) banks' deposits at the Fed. C) coins. D) loans to banks. 3) Banks and other monetary institutions perform which of the following functions? A) create liquidity. B) lower costs of borrowing. C) pool the risks of lending. D) All of the above. 4) Monetary institutions create liquidity by A) using a large fraction of their deposits to purchase securities. B) accepting short-term deposits and making long-term loans. C) borrowing long and lending short. D) accepting just long-term deposits and making just short-term loans. 5) If a commercial bank has a shortage of reserves, it can A) print more cash. B) borrow in the federal funds market. C) make more loans in order to gain more reserves. D) do nothing because reserves are recommended, not required. 6) If someone buries money in a tin can beneath a tree, the money is functioning as a A) medium of exchange. B) unit of account. C) means of payment. D) store of value. 7) Which of the following is money? A) credit card B) debit card C) e-checks D) checkable deposit 8) What gives money value today? A) People have confidence that they can buy goods and services with it. B) Gold backing. C) The Federal government's willingness to redeem dollars for other assets. D) None of the above answers is correct. 1
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9) Joe deposits $200 in his checking account. As a result, the bank's assets ____ and its liabilities ____. A) do not change; increase B) do not change; decrease C) increase; increase D) increase; decrease 10) A bank has $150 of reserves and $1,000 of deposits. It is just meeting its required reserves. Thus the required reserve ratio is A) 10 percent. B) 20 percent. C) 25 percent. D) 15 percent. 11) Suppose the required reserve ratio is 20 percent. If the Bank of Bobby has total deposits of $200, total assets of $1,000, and actual reserves of $70, the amount of excess reserves is A) $40. B) $30. C) $200. D) $160. 12) Suppose a bank has $1,000 in deposits and $100 in reserves. If the required reserve ratio is 5 percent, how much can this bank increase its loans? A) $0. B) $400. C) $80. D) $50. 13) When a check you have written clears your bank,
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This note was uploaded on 05/22/2011 for the course ECO 2013 taught by Professor Denslow during the Spring '05 term at University of Florida.

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mt3fall3 - ECO 2013-02 Third Midterm, 19 November 2003 Dr....

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