Econ Exam #2

​Barter is the direct exchange of goods and services for:

• any kind of money

• other goods and services

• either goods or money

• commodity money

• foreign currency

​An important function of commercial banks is to _____.

•  

  ​print new currency

• ​issue fiat money

• ​mint coins

• ​redeem currency for precious metals

• ​make loans

​Exchange is necessary in an economy if:

• ​output is to be produced.

• output is to be consumed

• ​individuals are self-sufficient.

• ​families are self-sufficient.

• labor is specialized

The reserve ratio is the ratio of:

• ​Federal Reserve member banks to nonmember bank

• ​Federal Reserve nonmember banks to member banks.

• Federal Reserve member banks to all U.s Banks

• a banks total deposits to its reserves

• a banks reserves tp its total deposits

Banks want to minimize their holdings of excess reserves because:

• ​they will be penalized by the Federal Reserve System if excess reserves are too high.

• required reserves are also minimized when banks minimize their holdings of excess reserves.

• ​the money multiplier becomes too large if the excess reserves are high.

• they want to borrow more on the federal funds market.

• excess reserves earn no intrest

Banks help to overcome the problem of asymmetric information by

• lending to a single rich borrower and not diversifying their portfolio.

• acquiring expertise in evaluating the credit histories of borrowers.

• threatening borrowers.

• offering only one type of loan.

• providing information to lenders.

In the federal funds market, _____.​

• banks make loans to the Fed

• ​banks make short-term loans to other banks

• ​banks make long-term loans to other banks

• ​the Fed makes short-term loans to private borrowers

• ​the Fed makes long-term loans to commercial banks

On a bank's balance sheet, the value of its assets must equal the value of its:

• net worth only.

• liabilities only.

• revenues plus costs.

• the value of its liabilities plus net worth.

• revenues minus costs.

Suppose a bank has $8,000 in checkable deposits and the required reserve ratio is 0.2. If actual reserves equal $3,000, then excess reserves equal:​

• 1600

• 1400

• 2400

• 5000

• zero

Suppose the First National Bank acquires $500,000 in new deposits and the required reserve ratio is 12 percent. Which of the following is true?​

• ​Required reserves on the new deposits are $12,000.

• Excess reserves on the new deposits are $500,000.

• ​Required reserves on the new deposits are $60,000.

• ​Excess reserves on the new deposits are $12,000.

• Total reserves on the new deposits are $440,000.