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1) A bank has excess reserves to lend but is unable to find anyone to borrow the money This will _________ the size of the money multiplier? a. reduce b. have no effect on c. increase d. double
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2) The difference between a bank’s actual reserves and its required reserves is its? a. required reserve ratio b. profit margin c. excess reserves d. net worth
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3) A checking deposit in a bank in considered _________ of that bank? a. an asset b. capital c. net worth d. a liability
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4) Money that a government has required has required to be accepted in settlement of debts is ? a. barter money b. currency value c. legal tender d. commodity money
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5) Which one of the following is not true ? a. The difference between the price at which commercial bank sells an asset to the central bank and the price it agrees to buy it back can be expressed a b. Commercial banks may borrow from and lend to each other and the interest rate at which they do this is called the refinancing rate c. In the UK the refinancing rate is known as the repo rate and in the USA it is referred to as the discount rate. d. If the central bank has bought some assets from a commercial bank with an agreement that the commercial bank will buy them back at a later date, then e. If the central bank raises its refinancing rate then the commercial banks will try to reduce their lending and so reduce the need to borrow from the c
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6) Suppose the central bank purchases a government bond from a person who deposits the entire amount received from the sale in her bank the money supply will ? a. rise by an amount that depends on the bank’s reserve ratio b. rise by less than the amount of the deposit c. fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio d. fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio e. be unchanged
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7) Suppose all banks maintain a 100 percent reserve ratio. If an individual deposits Rs 1,000 of currency in a bank ? a. the money supply increases by more than Rs 1,000 b. the money supply increase by less than Rs 1,000 c. the money supply decrease by less than Rs 1,000 d. the money supply decrease by more than Rs 1,000 e. The money supply is unaffected
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8) The refinancing rate is ? a. The interest rate at Which commercial banks lend to and borrow from each other b. The interest rate the European Central Bank pays on reserves c. The interest rates the public pays when borrowing from banks d. The interest rates the European Central Bank charges on loans to banks e. He interests rate banks pay on the public’s deposits
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9) Reserve requirements that may be imposed on an economy’s banks by its central bank specify that banks by its central bank specify that banks reserve must be a minimum percentage of them ? a. assets b. deposits c. loans d. government bonds
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10) If the banks in an economy operate with a reserve ratio of 20 percent then the money multiplier is ? a. 4 b. 20 c. 25 d. 5
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11) Which of the following statements about money is not true ? a. A debit card is not really money because it is only a means of transferring money between accounts b. All the wealth that people hold, in whatever form, should be considered as money c. Wealth held in the current account you hold with your bank is almost as convenient for buying things as wealth held in your wallet so the wealth in cu d. In a complex economy it is not easy to draw a clear dividing line between assets that should be considered as money and those that should not
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12) An example of fiat money is ? a. Paper euros b. gold c. Silver coins d. cigarettes
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13) Money is ? a. The value of all coins and currency in circulation at any time b. Anything that is generally accepted as a medium of exchange c. The same as income d. All of the above
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