Financial intermediaries undertake all the following activities except they do not ______.

minimize the cost of monitoring borrowers
create liquidity
print money
pool risk

All the following statements about a credit union are true except it ________________.

is a financial intermediary
makes mostly consumer loans
accepts checking deposits
accepts savings deposits

Sarah buys shares from a financial institution that uses her funds together with other funds to purchase U.S. treasury bills. Sarah has deposited her money into a _______________.

credit union
savings bank
money market mutual fund
savings and loan association

If total deposits at a bank increase, with no change in its loans, the reserve ratio ___________.

is greater than 1
does not change
increases
decreases

A bank's required reserves are calculated by multiplying _____________________.

the gold in its vault by the reserve ratio
the sum of its deposits and cash in its vault by the reserve ratio
its deposits by the required reserve ratio
cash in its vault by the required reserve ratio

A bank cannot create money unless its ________________________.

excess reserves equal deposits multiplied by the reserve ratio
excess reserves are zero
actual reserves are greater than required reserves
required reserves are greater than actual reserves

The change in deposits divided by the change in reserves is called the ___________ multiplier.

bank
central bank
deposit
monetary policy

Automatic teller machines ________________.

increase inflation
increase real GDP
are an example of financial innovation
increase reserve ratios

According to the quantity theory of money, in the long run, an increase in the quantity of money results in an equal percentage increase in ____________________.

the growth rate of potential GDP
the growth rate of real GDP
the price level
the inflation level

The velocity of circulation increases when ____________________.

the price level decreases and potential GDP decreases
the quantity of money increases
the price level increases
real GDP decreases

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