EU251L3
1
Your deposit at the bank is _____ to you and _________ to your bank.
net worth; a liability
an asset; a liability
an asset; net worth
net worth; an asset
2
In an economy, currency in circulation is £25 billion, non-interest bearing bank deposits is £50 billion, other bank retail deposits is £500 billion, building society retail shares and other deposits is £100 billion, and bank and building society wholesale deposits is £400 billion. M4 equals _______ billion.
£1.075
£1,000
£975
£675
3
The following table shows the balance sheet for Ralph's Bank. If the desired reserve ratio on deposits is 15 percent, Ralph's Bank has desired reserves of _______ million.
£133
£500
£300
£1,500
4
The following table shows the balance sheet for Ralph's Bank. If the desired ratio on deposits is 15 percent, Ralph's Bank has excess reserves of _______ million.
£300
£1,500
£500
£200
5
The following table shows the balance sheet for Ralph's Bank. If the desired reserve ratio on deposits is 15 percent, the maximum amount that Ralph's Bank can loan out is equal to _______________.
actual reserves minus excess reserves
the deposit multiplier
the amount of the desired reserves
the amount of the excess reserves
6
If deposits increase from £1 million to £2 million and reserves increase from £400,000 to £800,000, then the value of the deposit multiplier is _______________.
0.25
4.00
0.40
2.50
7
When bank deposits increase from £1 million to £2 million, bank reserves increase from £400,000 to £800,000. If banks hold no excess reserves, then the desired reserve ratio is ________________.
0.40
0.25
4.00
2.50
8
Suppose that the desired reserve ratio is 20 percent. If Bartholomew deposits £50,000 into his bank, what is the total increase in deposits in the banking system?
£250,000
£10,000
£62,500
£50,000
9
The quantity of money in an economy is £6 million, and the velocity of circulation is 3. GDP in this economy is ___________.
£18 million
£3 million
£6 million
£2 million
10
In the short run, _______ in the quantity of money _______ the price level, and ____________ real GDP.
an increase; increases; increases
an increase; increases; decreases
a decrease; decreases; does not change
an increase; increases; does not change