Question :
81.InDecember1999peoplefearedthattheremightbecomputerproblemsatbanksasthecenturychanged.Consequently,peoplewantedtoholdrelativelymoreincurrencyandrelativelylessindeposits.Inanticipationbanksraisedtheirreserveratiostoha : 1262057
81.InDecember1999peoplefearedthattheremightbecomputerproblemsatbanksasthecenturychanged.Consequently,peoplewantedtoholdrelativelymoreincurrencyandrelativelylessindeposits.Inanticipationbanksraisedtheirreserveratiostohaveenoughcashonhandtomeetdepositors’demands.Theseactionsbythepublic
a.wouldincreasethemultiplier.IftheFedwantedtooffsettheeffectofthisonthesizeofthemoneysupply,itcouldhavesoldbonds.
b.wouldincreasethemultiplier.IftheFedwantedtooffsettheeffectofthisonthesizeofthemoneysupply,itcouldhaveboughtbonds.
c.wouldreducethemultiplier.IftheFedwantedtooffsettheeffectofthisonthesizeofthemoneysupply,itcouldhavesoldbonds.
d.wouldreducethemultiplier.IftheFedwantedtooffsettheeffectofthisonthesizeofthemoneysupply,itcouldhaveboughtbonds.
82.Inthe19thcentury,whencropfailuresoftenledtobankruns,bankswouldmakerelativelyfewerloansandholdrelativelymoreexcessreserves.Byitself,theseactionsbythebanksshouldhave
a.increasedthemoneymultiplierandthemoneysupply.
b.decreasedthemoneymultiplierandincreasedthemoneysupply.
c.increasedthemoneymultiplieranddecreasedthemoneysupply.
d.decreasedboththemoneymultiplierandthemoneysupply.
83.Themoneysupplydecreasesif
a.householdsdecidetoholdrelativelymorecurrencyandrelativelyfewerdepositsandbanksdecidetoholdrelativelymoreexcessreservesandmakefewerloans.
b.householdsdecidetoholdrelativelymorecurrencyandrelativelyfewerdepositsandbanksdecidetoholdrelativelyfewerexcessreservesandmakemoreloans.
c.householdsdecidetoholdrelativelylesscurrencyandrelativelymoredepositsandbanksdecidetoholdrelativelymoreexcessreservesandmakefewerloans.
d.householdsdecidetoholdrelativelylesscurrencyandrelativelymoredepositsandbanksdecidetoholdrelativelylessexcessreservesandmakemoreloans.
84.AproblemthattheFedfaceswhenitattemptstocontrolthemoneysupplyisthat
a.the100-percent-reservebankingsystemintheU.S.makesitdifficultfortheFedtocarryoutitsmonetarypolicy.
b.theFedhastogettheapprovaloftheU.S.TreasuryDepartmentwheneveritusesanyofitsmonetarypolicytools.
c.theFeddoesnothaveatoolthatitcanusetochangethemoneysupplybyeitherasmallamountoralargeamount.
d.theFeddoesnotcontroltheamountofmoneythathouseholdschoosetoholdasdepositsinbanks.
85.AproblemthattheFedfaceswhenitattemptstocontrolthemoneysupplyisthat
a.sincetheU.S.hasafractional-reservebankingsystem,theamountofmoneyintheeconomydependsinpartonthebehaviorofdepositorsandbankers.
b.theFedhastogettheapprovaloftheU.S.TreasuryDepartmentwheneveritusesanyofitsmonetarypolicytools.
c.whiletheFedhastheabilitytochangethemoneysupplybyalargeamount,itdoesnothavetheabilitytochangeitbyasmallamount.
d.federallegislationinthe1950sstrippedtheFedofitspowertoactasalenderoflastresorttobanks.
86.Whichofthefollowingiscorrect?
a.TheFedcancontrolthemoneysupplyprecisely.
b.Theamountofmoneyintheeconomydoesnotdependonthebehaviorofdepositors.
c.Theamountofmoneyintheeconomydependsinpartonthebehaviorofbanks.
d.Noneoftheaboveiscorrect.
87.TheFed’scontrolofthemoneysupplyisnotprecisebecause
a.Congresscanalsomakechangestothemoneysupply.
b.therearenotalwaysgovernmentbondsavailableforpurchasewhentheFedwantstoperformopen-marketoperations.
c.theFeddoesnotknowwhereallU.S.currencyislocated.
d.theamountofmoneyintheeconomydependsinpartonthebehaviorofdepositorsandbankers.
Table29-9
MetropolisNationalBankiscurrentlyholding2%ofitsdepositsasexcessreserves.
Metropolis National Bank
Assets
Liabilities
Reserves
$60,000
Deposits
$500,000
Loans
$440,000
88.RefertoTable29-9.MetropolisNationalBankiscurrentlyholding2%ofdepositsasexcessreserves.Whatisthereserverequirement?
a.12percent
b.10percent
c.8percent
d.6percent
89.RefertoTable29-9.MetropolisNationalBankiscurrentlyholding2%ofdepositsasexcessreserves.Assumingthatallbankshavethesamerequiredreserveratio,andthennonewanttoholdexcessreserveswhatisthevalueofthemoneymultiplier?
a.8.25
b.10
c.12
d.20
90.RefertoTable29-9.MetropolisNationalBankiscurrentlyholding2%ofdepositsasexcessreserves.Assumethatnobanksintheeconomywanttoholdexcessreservesandthatpeopleonlyholddepositsandnocurrency.HowmuchdoesthemoneysupplyultimatelyincreasewhenMetropolisNationalBanklendsoutitsexcessreserves?
a.$100,000
b.$110,000
c.$120,000
d.Noneoftheabovearecorrect.