M1 is defined as Question 1 options: one-dollar bills coins and currency held by

Question

M1 is defined as Question 1

options: one-dollar bills

coins and currency held by the nonbank

public currency and coins held by the nonbank public, checkable deposits, and traveler's checks

M3 minus M2

Bank A holds $1 million in required reserves and the required reserve ratio is 10 percent. It follows that Bank A holds checkable deposit liabilities that total

Question 2 options:

$1 million.

$10 million.

$20 million.

$100,000 million.

all currency and checkable deposits

Bank A has deposits of $8,000 and reserves of $1,200. If the required reserve ratio is 10 percent, the bank has excess reserves of

Question 3 options:

$800.

$600.

$400.

$200.

If a person uses money to buy a pair of shoes, money is functioning as

Question 4 options:

a medium of exchange.

a store of value.

a unit of account ormeasurement.

none of the above

A single commercial bank must meet a 20% reserve requirement. If this bank has no excess reserves to begin with and $20,000 cash is deposited into a checking account in the bank, then the bank can safely increase its loans by a maximum of:

Question 5 options:

$4,000.

$20,000.

$2,000.

$16,000.

National Bank holds $58,000,000 in checkable deposits and $0 in excess reserves under a required reserve ratio of 10 percent. Suppose customers of the bank bring in $2,000,000 in currency to add to their checkable deposits. How much more money can this bank now create at maximum?

Question 6 options:

$1,300,000

$2,300,000

$1,800,000

$700,000

When a bank accepts a deposit from one of its customers, to the bank the deposit account is classified as

Question 7 options:

an asset.

neither an asset nor a liability.

an asset in some cases and a liability in other cases, depending on the type of loan.

a liability.

Which of the following is not included in M1?

Question 8 options:

checkable deposits (checking accounts)

savings deposits (savings accounts)

currency and coins in circulation

demand deposits

Required reserves are the amount of

Question 9 options:

reserves a bank must hold against all its assets as mandated by the Federal Reserve.

reserves a bank must hold against its deposits as mandated by the Federal Reserve.

cash a bank must hold against its deposits as mandated by the Federal Reserve.

checkable deposits a bank must hold against all other deposits as mandated by the U.S. Treasury.

Fractional reserve banking is a term used to describe a banking system whereby

Question 10 options:

individual banks share a fraction of the total funds deposited in the whole banking system.

banks are required to quote interest rates in fractions.

banks hold reserves equal to a multiple of their deposit liabilities; that is, fractional in this case really means multiple.

banks hold reserves equal to only a fraction of their deposit liabilities.

banks are required to maintain a certain fraction of their deposits in the form of checkable deposits, a certain fraction of their deposits in the form of savings deposits, etc.

$1 million.

$10 million.

$20 million.

$100,000 million.

Explanation / Answer

1.

Currency and coins held by the nonbank public, checkable deposits, and traveler's checks

The combination of currency held by the nonbank public, vault cash held by banks, and Federal Reserve deposits of the banks. Also termed high-powered money

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