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Unit 11 - PRACTICE Quiz - MACRO money & banking



Multiple Choice
Identify the choice that best completes the statement or answers the question.
 

 1. 

Which of the following is a correct listing of money's functions?
a.
source of credit, value of transaction costs, unit of barter
b.
medium of barter, medium of exchange, medium of transactions
c.
unit of barter, unit of account, a unit of income
d.
store of value, store of exchange, measure of account
e.
store of value, medium of exchange, unit of account
 

 2. 

Let’s suppose that there are two people.  One person owes the other person a debt because they did some work for the other.  The two people decide that the debt is worth $200.  In this situation, money is functioning as a
a.
a unit of account or unit of measurement.
b.
a store of value.
c.
a medium of exchange.
d.
none of the above
 

 3. 

The requirement of a "double coincidence of wants" is the chief __________ of the __________ exchange system.
a.
advantage; barter
b.
advantage; monetary
c.
disadvantage; barter
d.
disadvantage; monetary
 

 4. 

M1 is comprised of currency held outside banks + checkable deposits + __________.
a.
credit cards
b.
savings deposits
c.
gold
d.
traveler's checks
 

 5. 

Reserves equal
a.
checkable deposits + vault cash + traveler's checks.
b.
vault cash + currency in the hands of the nonbanking public.
c.
bank deposits at the Federal Reserve.
d.
bank deposits at the Federal Reserve + vault cash.
 

 6. 

If checkable deposits in Bank A total $12 million and the required reserve ratio is 15 percent, then required reserves at Bank A equal
a.
$2.0 million.
b.
$1.5 million.
c.
$1.8 million.
d.
$10.2 million.
 

 7. 

Ninth National Bank holds $148,000,000 in checkable deposits and $18,000,000 in reserves. With a required reserve ratio of 12 percent, how much in excess reserves is Ninth National holding?
a.
$2,160,000
b.
$240,000
c.
$35,760,000
d.
$15,840,000
 

 8. 

Bank A has deposits of $5,000 and reserves of $1,800. If the required reserve ratio is 0.20, the bank has required reserves of
a.
$1,000.
b.
$2,000.
c.
$3,000.
d.
$4,000.
 

 9. 

Suppose that the excess reserves in Bank A increase by $700. If the required reserve ratio is 25 percent, what is the maximum change in checkable deposits brought about by the banking system?
a.
$175
b.
$2,400
c.
$2,600
d.
$2,800
 

 10. 

A bank has zero excess reserves, with a required reserve ratio of 10 percent. If $100,000 in cash is withdrawn from the bank, it has a reserve deficiency of
a.
$10,000.
b.
$90,000.
c.
$100,000.
d.
$1,000,000.
 

 11. 

When a bank makes a loan to one of its customers, to the bank the loan is classified as
a.
an asset.
b.
a liability.
c.
neither an asset nor a liability.
d.
an asset in some cases and a liability in other cases, depending on the type of loan.
 

 12. 

National Bank holds $74,000,000 in checkable deposits, holds $7,400,000 in reserves, and has excess reserves of exactly zero. If $3,000,000 in checkable deposits is transferred to this bank, what is the maximum amount of new money National Bank can create (without assuming that any new loan is deposited)?
a.
$10,400,000
b.
$3,300,000
c.
$3,000,000
d.
$2,700,000
e.
There is not enough information to answer the question.
 



 
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