Question : 11) Riley deposits $4,000 cash in her checkable deposit at : 1227824

 

 

11) Riley deposits $4,000 cash in her checkable deposit at Fershur Bank. If the desired reserve ratio is 5 percent, Fershur Bank’s

A) desired reserves increase by $4,000.

B) assets and its liabilities change in opposite directions.

C) desired reserves increase by $200 and its excess reserves increase by $3,800.

D) excess reserves increase by $4,000.

E) liabilities do not change but its assets increase.

Answer:  C

Topic:  Desired reserve ratio

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  CD new

12) Suppose the desired reserve ratio is 10 percent. If Urban Bank has total deposits of $1000 and total assets of $10,000, the amount of desired reserves is

A) $100.

B) $900.

C) $1,000.

D) $9,000.

E) $1,100.

Answer:  A

Topic:  Desired reserve ratio

Skill:  Level 2: Using definitions

Section:  Checkpoint 11.4

Status:  CD new

 

13) A bank has $200 of reserves and $4,000 of deposits. It is just meeting its desired reserves and has no excess reserves. Thus the desired reserve ratio is

A) 10 percent.

B) 20 percent.

C) 25 percent.

D) 5 percent.

E) $200.

Answer:  D

Topic:  Desired reserve ratio

Skill:  Level 2: Using definitions

Section:  Checkpoint 11.4

Status:  CD new

 

14) If the desired reserve ratio is 7 percent and a bank has $10,000 of deposits, then its desired reserves are

A) $7.

B) $700.

C) $9,300.

D) $930.

E) $7,000.

Answer:  B

Topic:  Desired reserve ratio

Skill:  Level 2: Using definitions

Section:  Checkpoint 11.4

Status:  CD new

15) When Zane deposits $20,000 cash in his checkable deposit at the Citicorp and the Citicorp’s desired reserves increase by $5,000, the desired reserve ratio is

A) 5 percent.

B) 75 percent.

C) 25 percent.

D) 20 percent.

E) $5,000.

Answer:  C

Topic:  Desired reserve ratio

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  CD new

 

16) A bank reports reserves of $500,000, physical capital of $200,000, loans of $1,000,000, deposits of $1,000,000, and owners’ equity of $500,000. If the desired reserve ratio is 5 percent, the bank’s desired reserves are

A) $10,000.

B) $25,000.

C) $50,000.

D) $1,000,000.

E) $500,000.

Answer:  C

Topic:  Desired reserve ratio

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  CD new

 

17) The Banks of the Mississippi has excess reserves of $20,000, desired reserves of $80,000 and the desired reserve ratio is 5 percent. What are the total amount of deposits in this bank?

A) $5,000

B) $1,000,000

C) $1,600,000

D) $100,000

E) $180,000

Answer:  C

Topic:  Desired reserve ratio

Skill:  Level 3: Using models

Section:  Checkpoint 11.4

Status:  CD new

18) The part of a commercial bank’s reserves that are larger than desired are called

A) additional reserves.

B) required reserves.

C) excess reserves.

D) nonrequired reserves.

E) unnecessary reserves.

Answer:  C

Topic:  Excess reserves

Skill:  Level 2: Using definitions

Section:  Checkpoint 11.4

Status:  MR

 

19) Banks can make loans as long as they have

A) deposits.

B) reserves.

C) required reserves.

D) excess reserves.

E) excess government securities.

Answer:  D

Topic:  Excess reserves

Skill:  Level 1: Definition

Section:  Checkpoint 11.4

Status:  NAU

 

20) Actual reserves are equal to

A) minimum balances plus desired reserves.

B) required reserves plus fractional deposits.

C) excess reserves plus liabilities.

D) desired reserves plus excess reserves.

E) government securities plus cash in the bank’s vault.

Answer:  D

Topic:  Excess reserves

Skill:  Level 1: Definition

Section:  Checkpoint 11.4

Status:  DMC