Question 13 Which of the following will yield to a bank the lowest return? O Short term loans with little risk. Long term loans with a lot of risk. There is no distinction in the types of loans and risk or potential return. O Loans made where the liquidity rate is the highest. Question 14 2 pts The Federal Reserve has the duty of regulating the nation's money supply. True False

Question 13 Which of the following will yield to a bank the lowest return? O Short term loans with little risk. Long term loans with a lot of risk. There is no distinction in the types of loans and risk or potential return. O Loans made where the liquidity rate is the highest. Question 14 2 pts The Federal Reserve has the duty of regulating the nation's money supply. True False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Big bucks bank Assets Liabilities Total reserves $30mm demand deposits $190mm Loans $100mm Bonds $100mm Stockholder equity $40 mm Suppose the required reserve ratio is 10%. What is the maximum amount of money Big buck bank can create? If the reserve ratio is increased to 14%, what is the maximum amount of money BBB can create? 3 If the reserve ratio is still at 10% and BBB chose to buy bonds instead of making loans with its excess reserves, what is the maximum amount of money BBB can create? a) From question #1 & #3, if the prospective Loans and Bonds both paid interest of 6.8%, which strategy would be more profitable for BBB? b) If BBB decided to pursue #1 as a strategy, what is the maximum money making potential of the banking…
1. The Federal Reserve a. Is the large stockpile of currency reserved for wartime uses b. May be used for Federal, but not state government uses c. Is responsible for controlling the money supply d. Was established in 1789 with the ratifying of the Constitution 2.In a system of 100% reserve banking, $100 is deposited. What is the money multiplier? a. Depends on what is withdrawn from the account b. 1 c. $100 d. There is insufficient information to state the value of the money multiplier
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Question 34 Table 29-4 Reserves Loans Assets Bank of Smileville $4,000 Deposits 46,000 Liabilities $50,000 Refer to Table 29-4. The Bank of Smileville's reserve ratio is O a. 11.3 percent. b. 13.4 percent. c. 8.7 percent. O d. 8.0 percent.
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The table below shows information for United Bank. Deposits Reserves Reserve Requirement $300 million $33 million 10% Which of the following statements is true concerning United Bank in the federal funds market? Multiple Choice C O United Bank will lend $33 million reserves in the federal funds market. O United Bank will borrow $30 million reserves in the federal funds market. United Bank will lend $3 million reserves in the federal funds market. United Bank will borrow $3 million reserves in the federal funds market. @ a $ % Λ &
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Which financial innovation allows banks to avoid reserve requirements and to pay interest on deposits? A. Money market funds B. Sweep accounts C. Both money market funds and sweep accounts
1. Subject to the approval of the board of Governors, the decision of choosing the president of a district Federal Reserve bank is made by: A. All 9 district bankers B. The 6 district bank directors elected by the member banks C. 3 district bank directors who are professional bankers D. Class B and Class C directors 2. Assuming initially that the required reserve ratio = 10%, the currency-deposit ratio = 40%, and the excess reserve ratio = 0, a decrease in the required reserve ratio to 5% causes the M1 money multiplier to everything else held constant. A. Increase from 2.8 to 3.11 B. Decrease from 3.11 to 2.8 C. Increase from 2 to 2.22 D. Decrease from 2.22 to 2 %3D
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