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1) Suppose that a country has $50 billion in bank reserves, $100 billion in currency held by the
public, and $500 billion in bank deposits. The currency drain ratio is
A) 20%. B) 18%. C) 30%. D) 50%. E) 10%.
1)
Use
the
information
below
to
answer
the
following
questions.
Fact
24.4.1
The Bank of Speedy Creek has chosen the following initial balance sheet:
Assets Liabilities
Reserves $40 Deposits $500
Loans $460
$500
2) Refer to Fact 24.4.1. Based on the Bank of Speedy Creek’s initial balance sheet, what is its
desired reserve ratio?
A) 8 percent
B) 40 percent
C) 4 percent
D) 12.5 percent
E) 25 percent
2)
1
Use
the
information
below
to
answer
the
following
questions.
Fact
24.4.2
The Bank of Hobbiton has chosen the following initial balance sheet:
Assets Liabilities
Reserves $100 Deposits $2,000
Loans $1,900
$2,000
3) Refer to Fact 24.4.2. Based on the Bank of Hobbiton’s initial balance sheet, what is its desired
reserve ratio?
A) 5 percent
B) 20 percent
C) 100 percent
D) 10 percent
E) not calculable with the available information
3)
2
Use
the
figure
below
to
answer
the
following
questions.
Figure
24.5.1
4) Refer to Figure 24.5.1. Everything else remaining the same, which graph best shows an increase
in real GDP?
A) (a)
B) (b)
C) (c)
D) (d)
E) (a) and (c)
4)
5) If the desired reserve ratio is 3 percent and deposits totaled $5.75 billion, banks hold
A) $172.5 million in reserves.
B) $192 million in reserves.
C) $0.1725 million in reserves.
D) $0.1725 million in excess reserves.
E) $172.5 million in excess reserves.
5)
3
6) If households and firms find they are holding more money than desired, they will
A) sell bonds, and the interest rate will fall.
B)
b
uy bonds, and the interest rate will fall.
C) sell bonds, and the interest rate will rise.
D)
b
uy bonds, and the interest rate will rise.
E)
b
uy goods, and the price level will rise.
6)
7) If the interest rate is above the equilibrium rate, how is equilibrium achieved in the money
market?
A) People buy goods to get rid of their excess money, lowering the price of goods and
lowering the interest rate.
B) People sell goods to get rid of their excess money, lowering the price of goods and
lowering the interest rate.
C) People buy bonds to get rid of their excess money, raising the price of bonds and
lowering the interest rate.
D) People sell bonds to get rid of their excess money, lowering the price of bonds and
7)