the economics of money, banking, and financial markets

482 $

© 2014 Pearson Canada Inc.$

42. 
    

    A bank has excess reserves of $10,000 and demand deposit liabilities of $100,000 when the
    desired reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, the bank's excess
    reserves will be ____.
    A) -$5,000
    B) -$1,000
    C) $1,000
    D) $5,000
    Answer: D
    Diff: 2 Type: MC Page Ref: 387 - 388
    Skill: Applied
    Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
    central bank can control the level of deposits by setting the level of reserves

    
    


43. 
    

    A bank has no excess reserves and demand deposit liabilities of $100,000 when the desired
    reserve ratio is 20 percent. If the reserve ratio is raised to 25 percent, the bank's excess reserves
    will now be ____.
    A) -$5,000
    B) -$1,000
    C) $1,000
    D) $5, 000
    Answer: A
    Diff: 2 Type: MC Page Ref: 387 - 388
    Skill: Applied
    Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
    central bank can control the level of deposits by setting the level of reserves

    
    


44. 
    

    A bank has excess reserves of $1,000 and demand deposit liabilities of $80,000 when the
    reserve requirement is 20 percent. If the reserve requirement is lowered to 10 percent, the bank's
    excess reserves will be ____.
    A) $1,000
    B) $8,000
    C) $9,000
    D) $17,000
    Answer: C
    Diff: 2 Type: MC Page Ref: 387 - 388
    Skill: Applied
    Objective List: 16.4 Utilize a simple model of multiple deposit creation, showing how the
    central bank can control the level of deposits by setting the level of reserves