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Unformatted text preview: operations? a. the Board of Governors b. the New York Federal Reserve Bank c. the Federal Open Market Committee d. the Open Market Committees of the regional Federal Reserve Banks ____ 32. Monetary policy affects employment a. only in the long run. b. only in the short run. c. in both the long run and the short run. d. in neither the long run nor the short run. 8 Name: ________________________ ____ ID: A 33. If a bank has a reserve ratio of 8 percent, then a. government regulation requires the bank to use at least 8 percent of its deposits to make loans. b. the bank’s ratio of loans to deposits is 8 percent. c. the bank keeps 8 percent of its deposits as reserves and loans out the rest. d. the bank keeps 8 percent of its assets as reserves and loans out the rest. Table 29‐2. An economy starts with $10,000 in currency. All of this currency is deposited into a single bank, and the bank then makes loans totaling $9,250. The T‐account of the bank is shown below. Assets Reserves $750 Loans 9,250 ____ Liabilities Deposits $10,000 34. Refer to Table 29‐2. The bank’s reserve ratio is a. 7.50 percent. b. 8.12 percent. c. 92.50 percent. d. 100 percent. Table 29‐4. The First Bank of Wahooton Assets Reserves $25,000 Loans 125,000 ____ Liabilities Deposits $150,000 35. Refer to Table 29‐4. Suppose the bank faces a reserve requirement of 10 percent. Starting from the situation as depicted by the T‐account, a customer deposits an additional $50,000 into his account at the bank. If the bank takes no other action it will a. have $65,000 in excess reserves...
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This note was uploaded on 06/12/2013 for the course ECON 252 taught by Professor Robertholand during the Fall '08 term at Purdue University-West Lafayette.

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