Examining and supervising commercial banks

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Reference no: EM131499091

1. Suppose the banking system does NOT hold excess reserves and the reserve ratio is 25%. If Molly deposits $1,000 cash in her checking account, the banking system can increase the money supply by:

2. To _____ the money supply, the Federal Reserve could _____.

increase; conduct open-market salesdecrease; lower the reserve requirements decrease; lower the federal funds rateincrease; lower the discount rate

3. If the Fed conducts an open-market sale, bank reserves _____ and the money supply is likely to _____. increase; increase decrease; decreaseincrease; decreasedecrease; increase

4. Scenario: Money Supply Changes

The reserve requirement is 10% and Jack withdraws $5,000 travel money from his checkable deposit. Assume that banks do not hold any excess reserves and that the public holds no currency, only checkable bank deposits.Reference: Ref 14-6

(Scenario: Money Supply Changes) Look at the scenario Money Supply Changes. As a result of the withdrawal, excess reserves _____ by _____. decrease; $4,500decrease; $500increase; $5,000increase; $500

5. Which of the following is a function of the Federal Reserve System?

I. conducting fiscal policy

II. examining and supervising commercial banks in the Fed regions

III. evaluating corporate mergers I onlyIII onlyI,II, and IIIII only

6. Scenario: First National Bank

First National Bank has $80 million in checkable deposits, $15 million in deposits with the Federal Reserve, $5 million cash in the bank vault, and $5 million in government bonds.Reference: Ref 14-11

(Scenario: First National Bank) Look at the scenario First National Bank. The bank has liabilities of: $95 million.$80 million.$100 million.$105 million.

7. Suppose a bank gets a new deposit of $100 cash and it has a 20% required reserve ratio. If the bank lends the maximum amount of money allowed, then the checkable deposits (including the original deposit) increase by: $500.$100.$20.$1,000.

8. Which of the following assets is the MOST liquid? 

stocks currency checkable bank deposits money market mutual funds

Could you give me these answers?

Reference no: EM131499091

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