Blank Exam 2 - Econ 317 Exam 2 1. From 1970 to 2011,...

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Unformatted text preview: Econ 317 Exam 2 1. From 1970 to 2011, commercial banks main source of funds has been transaction deposits. True/False? Explain. 2. The Federal Funds market is so named because it is the market where banks borrow from the Federal Reserve. True/False? Explain. 3. As strange as it may seem, Federal and State regulators view a bank with a 5% capital-to-asset ratio as a well capitalized bank. True/False? Explain. 4. You decide to close your account at First Bank of the South. You then use that money (all $500) to open an account at Capital One. a. Complete the following T-account charts to show what happens to each banks (total) reserves. b. Because of this transaction, the banking system can now expand by up to 5 times the amount of your deposit. True/False? Explain. Capital One First Bank of the South Assets Liabilities Assets Liabilities Reserves Checkable Deposits +$500 Reserves Checkable Deposits-$500 5. Consider the free banking system weve discussed in class, wherein banks are allowed to issue their...
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Blank Exam 2 - Econ 317 Exam 2 1. From 1970 to 2011,...

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