Unformatted text preview: — 0:35:53 Page: 1 2 3 4 5 e 7 (Next) 1 What are the pros and eons 0t deposit insurance?
Choose one answer a pro: creates less banking crises, con' banking customers worry more about their deposits.
b pro: limits banking panirs, con: creates moral hazard.
7 [2. pro: minimizes morai hazard. con: creates more banking crises.
(g) d. pro: minimizes moral hazard: con, creates more banking panics
2 The Fed prints $100 to buy Treasury securities from the banking system Assume the requirement is 20%. Assume the full money multiplication pmcess is at work. How much money is created by the banking
Marks: 1 system?
Choose one answer a $500
('1 1:. $400
_ d. zero. Fed creates the money
3 Consider a failing bank and assume the FDiC insurance is $250,000. A deposit of$550.000 is worth how much if the FDIC usesthe payoﬁ method'? The purchase and assumption method?
Choose one answer. (Q; 3. 495.000; 550000
b. 555.000; 550000
r: 25,000; 550,000
(:3 :1 500000; 550000
4 Assume that the Federal Reserve prints $500 in currency and uses the eurrency to buy Treasury securities from the banking system The banking system then loans out $900 of dtecking money What is the
Marks: 1 new money suppiy, M1?
Choose one answer. ('3 a. 1400
.3 t: 500
.3 d. 400
5 Use Table 7. Calculate the total risk adjusted assets
Reserves 55m Checkable deposits S40m
Treasury securities S3ﬂm Non—transaction Deposits mm
Real Estate loans 520m
Commercial Loans $75m
Choose one answer. Q a. $75M
Q h. $100M
(i) c. $95M Save without submitting Submit al and ﬁnish Page: 1 2 3 4 5 6 7 (Next) ‘r'nu srs ingged in as ohsn Shari (Lognul) SAN FRA
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- Spring '08