Question :
51.Whenthereisareserverequirement,banks
a.mustholdexactlytherequiredquantityofreserves.
b.mayholdmorethan,butnotlessthan,therequiredquantityofreserves.
c.mayholdlessthan,but : 1262054
51.Whenthereisareserverequirement,banks
a.mustholdexactlytherequiredquantityofreserves.
b.mayholdmorethan,butnotlessthan,therequiredquantityofreserves.
c.mayholdlessthan,butnotmorethan,therequiredquantityofreserves.
d.mustseektheFed’spermissionwhenevertheywishtoexpandorcontracttheirloanstocustomers.
52.Ifthereserverequirementis10percent,whichofthefollowingpairsofchangeswouldbothallowabanktolendoutanadditional$10,000?
a.theFedbuysa$10,000bondfromthebankorsomeonedeposits$10,000inthebank
b.theFedbuysa$10,000bondfromthebankortheFedlendsthebank$10,000
c.theFedsellsa$10,000bondtothebankorsomeonedeposits$10,000inthebank
d.theFedsellsa$10,000bondtothebankortheFedlendsthebank$10,000
53.In1991,theFederalReserveloweredthereserverequirementfrom12percentto10percent.Otherthingsthesamethisshouldhave
a.increasedboththemoneymultiplierandthemoneysupply.
b.decreasedboththemoneymultiplierandthemoneysupply.
c.increasedthemoneymultiplieranddecreasedthemoneysupply.
d.decreasedthemoneymultiplierandincreasedthemoneysupply.
54.Atonetime,peopleinacertaincountryhadnoaccesstobanks;theyreliedexclusivelyoncurrency.Then,afractional-reservebankingsystemwascreated.Asaresult,themoneysupply
a.increased.Thecentralbankcouldhavereducedthesizeofthisincreasebybuyingbonds.
b.increased.Thecentralbankcouldhavereducedthesizeofthisincreasebysellingbonds.
c.decreased.Thecentralbankcouldhavereducedthesizeofthisdecreasebybuyingbonds.
d.decreased.Thecentralbankcouldhavereducedthesizeofthisdecreasebysellingbonds.
55.Inafractional-reservebankingsystemwithnoexcessreservesandnocurrencyholdings,ifthecentralbankbuys$100million worth of bonds,
a.reservesandthemoneysupplyincreasebylessthan$100million.
b.reservesincreaseby$100millionandthemoneysupplyincreasesby$100million.
c.reservesincreaseby$100millionandthemoneysupplyincreasesbymorethan$100million.
d.bothreservesandthemoneysupplyincreasebymorethan$100million.
56.ThemoneysupplyincreaseswhentheFed
a.buysbonds.Theincreasewillbelarger,thesmalleristhereserveratio.
b.buysbonds.Theincreasewillbelarger,thelargeristhereserveratio.
c.sellsbonds.Theincreasewillbelarger,thesmalleristhereserveratio.
d.sellsbonds.Theincreasewillbelarger,thelargeristhereserveratio.
57.ThemoneysupplydecreasesiftheFed
a.sellsTreasurybonds.Thelargerthereserverequirement,thelargerthedecreasewillbe.
b.sellsTreasurybonds.Thesmallerthereserverequirement,thelargerthedecreasewillbe.
c.buysTreasurybonds.Thelargerthereserverequirement,thelargerthedecreasewillbe.
d.buysTreasurybonds.Thesmallerthereserverequirement,thelargerthedecreasewillbe.
58.ThemoneysupplyincreaseswhentheFed
a.lowersthediscountrate.Theincreasewillbelargerthesmallerthereserveratiois.
b.lowersthediscountrate.Theincreasewillbelargerthelargerthereserveratiois.
c.raisesthediscountrate.Theincreasewillbelargerthesmallerthereserveratiois.
d.raisesthediscountrate.Theincreasewillbelargerthelargerthereserveratiois.
59.TheFedpurchases$200worthofgovernmentbondsfromthepublic.Thereserverequirementis12.5percent,peopleholdnocurrency,andthebankingsystemkeepsnoexcessreserves.TheU.S.moneysupplyeventuallyincreasesby
a.$25.
b.between$200and$300.
c.$1,600.
d.$2,500.
60.TheFedincreasesthereserverequirement,butitwantstooffsettheeffectsonthemoneysupply.Whichofthefollowing shouldit do?
a.sellbondstoincreasereserves
b.sellbondstodecreasereserves
c.buybondstoincreasereserves
d.buybondstodecreasereserves