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WorksheetsMoney and Banking
Total questions: 30
Worksheet time: 20mins
Name
Class
Date
1.
What is the equation of exchange?
a)
1/RR
b)
1/MPS
c)
MV=PQ=GDP
d)
Excess=Actual-Required
2.
In the Money Market graph, the
a)
demand for money is perfectly elastic
b)
supply of money is perfectly inelastic
c)
the price axis is labeled real interest rate
d)
the supply curve is leaning
3.
The Demand for Money is made up of
a)
M1
b)
Savings Bonds and Securities
c)
Real GDP
d)
Transactions Demand + Assets Demand
4.
A bank can only lend out it's
a)
required reserves
b)
total checkable deposits
c)
excess reserves
d)
actual reserves
5.
Kanye has $12,000 in cash and he deposits it in Kardashian National Bank. How much does M1 change?
a)
$12,000 x the monetary multiplier
b)
$12,000
c)
it doesn't change, cash and checks are both M1
d)
$12,000 less the required reserves
6.
Young Metro begins trusting banks and he deposits $10,000 in his. The reserve requirement is 20%. How much can his bank now lend out?
a)
$10,000
b)
$2,000
c)
$8,000
d)
$0
7.
A commercial bank sells $10k in securities. The reserve requirement is 10%. How much of the money can the bank lend?
a)
$10,000
b)
$9,000
c)
$1,000
d)
$0
8.
When the money supply increases, nominal interest rate will
a)
increase
b)
decrease
c)
remain the same
d)
shift left
9.
Each of the following FED actions will contract the money supply except
a)
raise the reserve ratio
b)
raise the discount rate
c)
raise the Federal Funds rate
d)
buy bonds
10.
Suppose that Captain Crunch bank has a customer deposit $5,000 and the bank's excess reserves go up by $4,000. The reserve ratio is
a)
10%
b)
$1000
c)
20%
d)
40%
11.
If the reserve ratio is 25%, this bank can lend out an additional _____ in loans
a)
$4
b)
$2
c)
$52
d)
$100
12.
If the reserve ratio is 20%, this bank can lend out an additional _____ in loans
a)
$2
b)
$12
c)
$52
d)
$100
13.
If the reserve requirement is 10% this bank can
a)
increase it's loans by $2000
b)
purchase $1500 in securities
c)
only keep it's loans at $8000
d)
increase it's loans by $1000
14.
If a loan is repaid at a commercial bank then
a)
commercial bank assets are increased.
b)
money is destroyed.
c)
commercial bank assets are decreased.
d)
money is created.
15.
A commercial bank has two conflicting goals;
a)
interest payments and interest accrual.
b)
liabilities and assets.
c)
money creation and money destruction.
d)
profits and liquidity.
16.
The demand for money consists of
a)
M1 plus M2.
b)
the tools of the Fed.
c)
asset demand plus transactions demand.
d)
checkable deposits and savings accounts.
17.
If the Fed increases the money supply, the economy will see
a)
a decrease in price level and an increase in real GDP.
b)
an decrease in price level and a decrease in real GDP.
c)
an increase in price level and a decrease in real GDP.
d)
an increase in price level and an increase in real GDP.
18.
If the nominal interest raises from 4% to 7% then the
a)
real interest rate fell by 4%.
b)
expected inflation rose by 3%.
c)
expected inflation fell by 3%.
d)
real interest rate must rise.
19.
Kim K. deposits $200 in her checking account. Later that day Kanye gets a loan for $3,000 from the same bank. What happens to the money supply
a)
increases by $200.
b)
increases by $2800.
c)
decreases by $3000.
d)
increases by $3000.
20.
If the reserve ratio is 25% and Ray deposits $100 in the bank the result will be
a)
$400 in money creation.
b)
$100 in money creation.
c)
$400 in money destruction.
d)
$100 in money destruction.
21.
If the Fed set the reserve requirement at 20%, the money multiplier would be
a)
5
b)
4
c)
10
d)
indeterminant
22.
Money with intrinsic value that can have some other use is called
a)
commodity money
b)
token money
c)
fiat money
d)
barter money
23.
A bond will increase in value if
a)
interest rates decrease.
b)
interest rates increase.
c)
the company files bankruptcy.
d)
the government increases it's debt.
24.
Carl wants a new computer. He goes to 6 different stores on the weekend comparing prices. Carl is using money as
a)
a store of value.
b)
a medium of exchange.
c)
commodity money.
d)
a unit of account.
25.
Mortimer transfers $100 from his savings account to his checking account. The effect on the money supply will be
a)
M1 increases, M2 decreases, M3 is unchanged.
b)
M1, M2, M3 all increase.
c)
M1 will increase, M2 and M3 are unchanged.
d)
M1 will increase, M2 will increase, M3 falls.
26.
___ is money that is deemed legal tender by the government, and it is not based on or convertible into a commodity.
a)
money supply
b)
liquidity
c)
fiat money
d)
commodity money
27.
This is a system where a reserve, or part, of a deposit needs to be kept on hand.
a)
Aggregate Measures
b)
Fractional reserve system
c)
multiplier effect
d)
Primary reserve
28.
If the reserve requirement is 8 percent, how much of a $100 deposit must be kept by a customer's bank and not loaned to other customers?
a)
$8.00
b)
$92.00
c)
$80.00
d)
$12.00
29.
What would happen of a commercial bank decided to hold more than required reserves?
a)
decrease in checking accounts
b)
decrease the amount of potential loans made by the bank
c)
increase the interest rate offered by the bank
d)
decrease the reserve ratio of the banking system
30.
The buying an selling of government securities in financial markets is an example of
a)
open market operations
b)
prime rate
c)
discount rate
d)
tight money policy
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