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Homework answers / question archive / Forest Hills High School - ECO MACROECONO Chapter 14 Question1)Stealth bank has deposits of $700 million

Forest Hills High School - ECO MACROECONO Chapter 14 Question1)Stealth bank has deposits of $700 million

Economics

Forest Hills High School - ECO MACROECONO

Chapter 14

Question1)Stealth bank has deposits of $700 million. It holds reserves of $20 million and has purchased government bonds worth $350 million. The banks loans, if sold at current market value, would be worth $600 million. What is the total value of Stealth bank’s assets?

 

 

   
 

 

     

 

   
     
  • Question 2

 

   
 

Which of the following would be classified in the M1 category of the money supply?

     

 

   
     
  • Question 3

 

   
 

The quantity of money in an economy and the _____________________ are inextricably intertwined.

     

 

   
     
  • Question 4

 

   
 

If loans become far less available, then sectors of the economy that ______________ like business investment, home construction, and car manufacturing can be dealt a crushing blow.

     

 

   
     
  • Question 5

 

   
 

Lance paid $175,000 for his house in 2003 and sold it for $325,000 in 2006. What function did the house serve during the time Lance owned it?

     

 

   
     
  • Question 6

 

   
 

The term ___________________ describes the proportion of deposits that the bank must hold in the form of reserves that are not loaned out or invested in bonds.

     

 

   
     
  • Question 7

 

   
 

Which of the following terms is considered to be a narrow definition of the money supply that includes, among other things, currency?

     

 

   
     
  • Question 8

 

   
 

An individual bank can, at most, lend out all of its:

     
       
  • Question 9

 

   
 

Assume that the Federal Reserve sets the reserve requirement at 10%. If a bank has $100 million in deposits, then its required reserves must equal:

     

 

   
     
  • Question 10

 

   
 

Assume that the reserve requirement is 20% and the Federal Open Market Committee buys a $100,000 bond. The money supply:

     

 

   
     
  • Question 11

 

   
 

If Abigail withdraws $300 cash from her checking account, then her bank's assets:

     

 

   
     
  • Question 12

 

   
 

If a bank has assets of $5 billion and liabilities of $4.8 billion:

     

 

   
     
  • Question 13

 

   
 

If a bank is subject to a reserve requirement of 10% and if its reserve ratio is 33%, then all of the following are true EXCEPT that it:

     

 

   
     
  • Question 14

 

   
 

If banks increase excess reserves to increase their ability to absorb a higher rate of defaults:

     

 

   
     
  • Question 15

 

   
 

If the reserve requirement is 10%, then the potential money multiplier is ____ and the actual money multiplier is ____.

     

 

   
     
  • Question 16

 

   
 

If the reserve requirement is 2.5% and a bank initially receives $30,000 in deposits from the Fed, then the maximum amount of money that the banking system can create is:

     

 

   
     
  • Question 17

 

   
 

The growth of businesses such as Coinstar that convert coins into bank notes or gift cards caused money to ____ and the actual money multiplier to ____, ceteris paribus.

     

 

   
     
  • Question 18

 

   
 

SCENARIO: Assume that the Empathy State Bank begins with the balance sheet below and is fully loaned up.

Empathy State Bank

 

Assets

Liabilities

 

Vault Cash

$2,500

Deposits

$100,000

Deposits at the Federal Reserve

7,500

 

 

Loans

90,000

 

 

 


Vanessa has a checking account at Empathy State Bank. If she writes a check for $5,000 to pay for her new car and if the bank has a reserve requirement of 5%, this bank's excess reserves will be:

     

 

   
     
  • Question 19

 

   
 

Which of the following does NOT explain why the actual money multiplier and the potential money multiplier are different?

     

 

   
     
  • Question 20

 

   
 

Which category of the money supply would you be contributing to if you invest in money market funds?

     

 

   
     
  • Question 21

 

   
 

Banks typically come under financial stress because of:

     

 

   
     
  • Question 22

 

   
 

If the central bank decreases the amount of reserves banks are required to hold from 20% to 10%, then:

     

 

   
     
  • Question 23

 

   
 

________________ serves society in three functions: medium of exchange, unit of account, and store of value.

     

 

   
     
  • Question 24

 

   
 

In modern economies, _____________________ receive money from savers and provide funds to borrowers.

     

 

   
     
  • Question 25

 

   
 

_______________________ that require the depositor to commit to leaving their funds in the bank for a certain period of time, in exchange for a higher rate of interest are also called ________________.

     

 

   
     

Monday, August 5, 2019 7:10:25 PM EDT

 

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