Banks and the money supply

The money in your UK bank account is all money created by the Bank of England.

• True

• False

Which of the following are functions of investment banks? Select three answers.

• Accepting cash deposits

• Providing day-to-day payment facilities for firms

• Providing large amounts of bespoke finance for firms

• Advising and negotiating mergers and acquisitions

• Trading in bonds and equities (capital market activities)

Which of these is not a common function of a high street bank?

• Short term loans to firms and customers

• Safe place to deposit cash

• Payments systems such as credit and debit cards

• Advising and managing private equity funds (funds that buy stakes in businesses)?

Which of these would be counted as an asset on the balance sheet of a retail/commercial/high street bank? (3 correct)

• Cash in vaults

• Deposits at the Bank of England

• Loans to firms and households

• The total value of deposits by customers

• Shareholder capital (money from shareholders)

If banks, on average, hold 25% of their deposits in reserve, what is the size of the money multiplier?

(a)  

Which of these assets are the most liquid?

• Loans to customers

• Cash and reserves at the Bank of England

• Government and corporate securities

What proportion of this bank's total liabilities are held in reserves?

• 10

• 20

• 30

• 90

A 'run on the bank' occurs when

• Depositors want to withdraw more money than can be paid out

• The value of a bank's assets in loans and securities plummet

• The Central Bank implements a reserve requirement