The Federal Reserve banks could probably have prevented many of the bank failures in the early 1930s by:a. helping to create a commission of experts to engage in a prolonged study of the problem.b. improving the system whereby checks are cleared.c. raising the reserve requirement of the commercial banks.d. lending money to the commercial banks.e. selling large amounts of government bonds.

A banks is primarily an institution which deals with the acceptance and withdrawal of deposits by…

The Federal Reserve banks could probably have prevented many of the bank failures in the early 1930s by: O a. helping to create a commission of experts to engage in a prolonged study of the problem. O b. improving the system whereby checks are cleared. c. raising the reserve requirement of the commercial banks. d. lending money to the commercial banks. O e. selling large amounts of government bonds.

The Federal Reserve banks could probably have prevented many of the bank failures in the early 1930s by: O a. helping to create a commission of experts to engage in a prolonged study of the problem. O b. improving the system whereby checks are cleared. c. raising the reserve requirement of the commercial banks. d. lending money to the commercial banks. O e. selling large amounts of government bonds.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the folloving represents a change in today's banking policies that should prevent a recurrence of the bank panics of 1930-1933? O A. banks are more cautious lenders O B. banks keep large amounts of excess reserves on hand O . the FDIC insures bank deposits and therefore depositors do not panic and rush to withdraw money when individual banks have financial problems O D. the President now has the authority to close banks whenever panics occur
QUESTION 19 Bank run refers to that O A. the central bank raises the reserve ratio of banks in the time of financial crisis. O B. the central bank runs to bail out banks. O C. many banks' depositors try to withdraw their funds because they fear a bank failure. OD. investment banks and hedge funds lend to each other on very short terms. QUESTION 20 Which of the following is true about the money creation by banks? O A. Money creation is the process of changes in the money supply through depositing and lending in a fractional-reserve banking system. O B. The amount of money as an asset increases, making the economy wealthier. O C. The central bank increases the monetary base. O D. Depositors withdraw funds from banks, holding them in cash.
If the Fed sells U.S. government securities to banks, the federal funds rate and banks' reserves O a. rises; increase O b. rises; decrease O c. falls; decrease O d. falls; increase O e. rises; do not change
Which of the following is NOT a function performed by a central bank? O a. Serving as a lender of last resort to commercial banks O b. Taking the deposits of commercial banks Making profits for its shareholders O d. Regulating the money supply
Question 3 In the market for reserves, suppose that the federal funds rate and discount rate are both at 7%. If the Federal Reserve Bank sells securities in the open market, then the equilibrium rate for reserves will and the amount of borrowed reserves will O not change; decrease O not change; increase O rise; increase O rise; decrease Question 4 When the Federal Reserve Bank lowers the reserve requirements for commercial banks in the economy, this causes the curve for reserves to decrease and so the curve shifts to the ----- O demand; right O demand: left O supply; right O supply; left
2. The Federal Reserve's Board of Governors consists of _____ members who are appointed by the _____ and confirmed by the _____. a. seven; Senate; president b. five; president; Senate c. seven; president; Senate d. twelve; Congress; president
By using open market operations, the Federal Reserve O a. adjusts the supply AND demand of reserves to keep the federal funds interest rate equal to its target. O b. adjusts the supply of reserves to keep the federal funds interest rate equal to its target. Oc controls banks' demand for reserves, thereby keeping the federal funds rate equal to its target. O d. adjusts the demand of reserves to keep bank rates in line with the federal funds rate target. O e. None of these answers is correct.
Question 2 In countries with very high rates of inflation (hyperinflation), it is usually the case that O the growth rate of the money supply is greater than the inflation rate. O the growth rate of the velocity of circulation is negative. O the growth rate of the money supply is less than the growth rate of the inflation rate. O the growth rate of the money supply is equal to the inflation rate.
Banks create money by O a. buying U.S. government securities with cash. O b. printing money up to their required reserve limit. O c. creating deposits without limit. O d. making loans and creating deposits, a process that is limited by the size of banks' excess reserves. O e. printing dollar bills without limit.
Question 3 If the Federal Reserve wants to increase the money supply, it can O increase the reserve ratio, allowing banks to loan more money to customers. O reduce the reserve ratio, allowing banks to loan more money to customers. sell bonds on the open market to banks, allowing them to loan less money to customers. O increase the reserve ratio, making it harder for banks to loan money to customers. Question 4 DELL C
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