FO - 2

Which of the following statements are true?

• A bank’s assets are its sources of funds.

• A bank’s liabilities are its uses of funds.

• A bank’s balance sheet shows that total assets equal total liabilities plus equity capital

• All of them are correct

Balance sheet of commercial bank shows that

• Total assets equals total liabilities plus equity capital.

• Lists sources and uses of bank funds

• Indicates whether or not the bank is profitable

• All of them are correct

Which of the following are reported as liabilities on a bank’s balance sheet?

• Reserves at Central Bank

• Loans to corporation

• Checkable deposits

• Deposits money at other banks

Which of the following are reported as liabilities on a bank’s balance sheet?

• Saving deposits

• Government bond

• Discount loans from Central Bank

• Building and machine

Which of the following is not an entity of the Federal Reserve System?

• Federal Reserve Banks

• The FDIC

• The Board of Governors

• The FOMC

Goal independence is:

• the ability of the central bank to set monetary policy goals.

• the ability of Congress to set monetary policy goals.

• the ability of the president to set monetary policy instruments

• the ability of Congress to set monetary policy instruments.

• the ability of the central bank to set monetary policy instrument

Central bank's assets include:

• Government securities.

• Discount loans.

• Currency in circulation.

• Commercial bank's reserves

Reserves are equal to the sum of

• required reserves and excess reserves.

• required reserves and vault cash reserves.

• excess reserves and vault cash reserves.

• excess reserves and total reserves

The percentage of deposits that banks must hold in reserve in the

• excess reserve ratio.

• required reserve ratio

• total reserve ratio

• currency ratio

An increase in government securities held by the Central Bank leads to

• easing monetary policy

• tightening monetary policy