34. In the United States, the reserve requirement is set by the: a. Bank of Amer
ID: 1221916 • Letter: 3
Question
34. In the United States, the reserve requirement is set by the:
a. Bank of America.
b. federal government.
c. U.S. Treasury.
d. Federal Reserve Board.
e. Department of Commerce.
35. Excess reserves are equal to:
a. total reserves plus required reserves.
b. cash plus required reserves.
c. total reserves minus cash.
d. total reserves minus required reserves.
e. required reserves minus total reserves.
36. What is the immediate effect when Bank A lends $1,000 to a local business?
a. The money supply increases by $1,000
b. The money supply decreases by $1,000
c. Bank A’s liability increases by $1,000
d. Bank A's excess reserves increase by $1,000
e. Bank A's demand deposits decrease by $1,000
37- The reciprocal of the reserve requirement is called the:
a. spending multiplier.
b. tax multiplier.
c. lending multiplier.
d. deposit expansion multiplier.
e. excess reserve multiplier.
38- The money-creating ability of the banking system may be lowered by:
a. a decrease in the cash balances that people wish to hold.
b. a fall in the overall rate of inflation.
c. an increase in the excess reserves.
d. an increase in total deposits.
e. an increase in the reserve requirement.
39- A surplus in a country’s trade balance means that:
a. net exports exceed transfer payments.
b. the country’s currency is over-valued.
c. the value of net exports is positive.
d. imports into the country exceed exports.
e. domestic savings exceeds domestic investment.
40- Financial intermediaries are best described as:
a. informal institutions that provide funds to the government to manage budget deficits.
b. institutions that accept deposits and make loans.
c. institutions that control the money supply in the economy.
d. institutions that invest in various business ventures.
e. individuals who manage their client’s investment portfolios.
Explanation / Answer
34)In the United States, the reserve requirement is set by the Federal Reserve Board.So correct option is d.
35) Excess reserves are equal to total reserves minus required reserves.So correct option is d.
36)The money supply increases by $1,000 when Bank A lends $1,000 to a local business.So correct option is a
37)The reciprocal of the reserve requirement is called the deposit expansion multiplier.So correct option is d
38)The money-creating ability of the banking system may be lowered by an increase in the reserve requirement.So correct option is e
39) A surplus in a country’s trade balance means that the value of net exports is positive.So correct option is c.
40) Financial intermediaries are best described as institutions that accept deposits and make loans.So correct option is b.
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