1. Which of the following most accurately describes a fractional reserve banking system?a Banks hold 100% of their deposits in cash in the bank vaultb. Banks hold a small fraction of their deposits in cash and invest the remainder inlong term assets such as treasuries and loans.c. Banks hold a large fraction of their deposits in cash and use the remainder to paytheir employees.dBanks pay interest as a fraction of deposits.2. Which of the following best describes the investments of SVB?a. Silicon Valley Bank had invested their deposits in risky tech start ups that hadsubsequently declared bankruptcy.b.Silicon Valley Bank had invested their deposits in short term Treasury bonds thatincreased in value as the Fed increased interest ratesc. Silicon Valley Bank had invested a majority of their deposits in FTX stock thatlost value when Sam Bankman-Fried was arrestedd. Silicon Valley Bank had invested their deposits in fixed rate bonds and loanswhich lost value as the Fed increased interest rates3. Which of the following banks is most susceptible to a bank run?a. A bank with 100% of deposits FDIC insured.b. A bank with 90% of deposits FDIC insured.CA bank with 50% of deposits FDIC insured.d. A bank with 5% of deposits FDIC insured.4. Approximately what percentage of SVB's deposits were FDIC insured?a. 7%b. 23%c. 50%

Fractional Reserve Banking System: This is a banking system in which banks are required to hold only…

Which of the following most accurately describes a fractional reserve banking system? a Banks hold 100% of their deposits in cash in the bank vaut b. Banks hold a small fraction of their deposits in cash and invest the remainder in long term assets such as treasuries and loans c. Banks hold a large fraction of their deposits in cash and use the remainder to pay their employees. d. Banks pay interest as a fraction of deposits.

Which of the following most accurately describes a fractional reserve banking system? a Banks hold 100% of their deposits in cash in the bank vaut b. Banks hold a small fraction of their deposits in cash and invest the remainder in long term assets such as treasuries and loans c. Banks hold a large fraction of their deposits in cash and use the remainder to pay their employees. d. Banks pay interest as a fraction of deposits.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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