econ quiz

Which of the following statements is FALSE?

• Bank capital is recorded as an asset on the bank balance sheet.

• The bank's assets provide the bank with income.

• A bank's assets are its uses of funds.

• A bank issues liabilities to acquire funds.

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

• reserves

•  

  consumer loans

•  

  checkable deposits

•  

  deposits with other banks

Which of the following statements is FALSE?

•  

  Checkable deposits are the primary source of bank funds.

•  

  Checkable deposits are usually the lowest cost source of bank funds.

•  

  Checkable deposits include NOW accounts.

•  

  Checkable deposits are payable on demand.

  
  

All of the following are nontransaction deposits EXCEPT

•  

  small-denomination time deposits.

  
  

•  

  savings accounts.

  
  

•  

  checkable deposits.

  
  

•  

  certificates of deposit.

  
  

Large-denomination CDs are ________, so that like a bond they can be resold in a ________ market before they mature.

•  

  nonnegotiable; primary

  
  

•  

  negotiable; primary

  
  

•  

  negotiable; secondary

  
  

•  

  nonnegotiable; secondary

  
  

Bank capital is equal to ________ minus ________.

•  

  total liabilities; total borrowings

  
  

•  

  total assets; total reserves

  
  

•  

  total assets; total liabilities

  
  

•  

  total liabilities; total assets

  
  

Bank reserves include

•  

  vault cash and short-term Treasury securities.

  
  

•  

  vault cash and deposits at the Fed.

  
  

•  

  deposits at other banks and deposits at the Fed.

  
  

•  

  deposits at the Fed and short-term treasury securities.

  
  

Banks may borrow from or lend to another bank in the Federal Funds market. A loan of excess reserves from one bank to another bank is recorded as a(n) ________ for the borrowing bank and a(n) ________ for the lending bank.

•  

  asset; asset

  
  

•  

  liability; asset

  
  

•  

  liability; liability

  
  

•  

  asset; liability

  
  

In general, banks make profits by selling ________ liabilities and buying ________ assets.

•  

  illiquid; liquid

  
  

•  

  long-term; shorter-term

  
  

•  

  short-term; longer-term

  
  

•  

  risky; risk-free

  
  

When Jane Brown writes a $100 check to her nephew and he cashes the check, Ms. Brown's bank ________ assets of $100 and ________ liabilities of $100.

•  

  loses; loses

  
  

•  

  gains; loses

  
  

•  

  loses; gains

  
  

•  

  gains; gains