You have completed the Lesson 10 Quiz. Score Your score on this attempt: 17 out of a possible 20 ( 85.0%) Graded Score: 17 out of a possible 20 ( 85.0%) Completion Time: 28 minutes 43 seconds Question Results Question 1: Commercial banking is a dynamic industry which must adjust to ____________ forces by using new technology and adjusting to accommodate new business climates. Type: Multiple Choice Points Awarded: 1/1 Your Answer(s): global Correct Answer(s) (in green): global nationwide only local none of the above Question 2: ________ is the “narrow measure of the money supply” and includes the circulating currency (paper and coin) plus checkable deposits of Households and Businesses. Type: Multiple Choice Points Awarded: 1/1 Your Answer(s):
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Transcript
You have completed the Lesson 10 Quiz.
Score
Your score on this attempt: 17 out of a possible 20 ( 85.0%)Graded Score: 17 out of a possible 20 ( 85.0%)Completion Time: 28 minutes 43 seconds
Question Results
Question 1:
Commercial banking is a dynamic industry which must adjust to ____________ forces by using new technology and adjusting to accommodate new business climates.
________ is the “narrow measure of the money supply” and includes the circulating currency (paper and coin) plus checkable deposits of Households and Businesses.
In “financial panics” prior to 1913, loans were often recalled by the lenders leading to __________ in the money supply and additional “runs” on the banking system.
The FED’s Board of Governors consists of seven members appointed for staggered _________ year terms by the President of the U.S. The purpose of this arrangement is to make the Board less political by having various board members serve under a succession of Presidents.
The twelve Regional Fed banks are “bankers' banks” and they hold deposits of member banks and make loans to member banks to meet ___________ requirements.
_____________________ at commercial banks are considered part of the “money supply” because they represent the debts of those banks that are circulating as purchasing power.
savings accounts checking accounts CD’s None of the above
Question 11:
Approximately ___________ of commercial banks in the U.S. are chartered by state banking commissions with the remainder being chartered by the Federal Comptroller of the Currency.
If _________________ choices are made by the newly added “hybrid organization” in our Circular Flow diagram, then a great deal of long term damage can be done to the economy.
net borrowing and spending reserve adjustment strong weak
Question 14:
In general the more money (M1) held by the public, the greater the tendency for people to spend and the public holds more money when interest rates are _________.
In the middle portion of this decade, “currency” was a little over 50 percent of the M1 and “____________________” were a little less than 50% of the M1.
FOMC Federal Advisory Council Board of Governors Chairman of the FED
Question 17:
Because of the definition of M1, when a bank spends (or loans) money or receives money (interest & loan payments, etc.) the size of the money supply (M1)changes.
Type: True or FalsePoints Awarded: 1/1Your Answer(s):True Correct Answer(s) (in green):
TRUE FALSE
Question 18:
Government stabilizes the value (purchasing power) of money by appropriate _________ policies and effective control over the money supply size.
When interest rates being paid on new bonds are higher but the interest payments on an existing bond remain fixed, the only way for the existing bond to compete is for its price to go _______________.
Excess Reserves Net Worth Reserves Legal Reserves None of the above
Question 4:
The multiplier process is limited by banks that do not fully loan out, but routinely maintain a ______________ (or during recessions banks may not be willing to lend fully).
Through the operation of the Goldsmiths’ principle and making loans on excess reserves, new _________ and purchasing power was (were) created in the local economy.
When a check is drawn against a customer’s account at Bank A, the legal reserves (cash) is _____________ for Bank A when the check clears through another bank.
savings deposits small time deposits (passbook and CD’s) checkable deposits all the above
Question 11:
Assume a required reserve ratio of 10 percent. If a loan of $100 is deposited into First Bank which then lends out $90 and the process continues to its maximum through the banking system, then the total increase in money supply M1 is $________ .
When Bank A makes a loan, the funds are deposited into the customer’s checking account and then transferred to Bank B if the customer’s check is deposited there. The funds ____________ then be loaned again by Bank B.
Banks play a very important role by providing savers a channel for their funds to be deposited and held safely while at the same time providing those funds as investment into the process of economic growth.
Type: True or FalsePoints Awarded: 1/1Your Answer(s):True Correct Answer(s) (in green):
TRUE FALSE
Question 16:
Assume $1,000 is deposited in a checkable account by Mr. X in Bank A. Assume further that the reserve requirement is 0.20. The total amount of money which can be created through the entire banking system is $__________ .
Federal Reserve buys securities Reserve ratio is reduced Discount rate is reduced All the above
Question 5:
The level and growth of the NDP is directly impacted by the amount of Business Investment which, in turn, is directly impacted by _______________ (the cost of renting money).
Government spending Money demand Money supply the Trade deficit
Question 12:
A net outflow of dollars resulting from a trade deficit is often returned to the United States for purchase of Treasury bonds that pay a market interest rate with __________ risk.
most frequently used most powerful least used least powerful
Question 16:
One reason that monetary policy is believed to be very effective by it supporters is because it does not impact all citizens in an equal manner.
Type: True or FalsePoints Awarded: 1/1Your Answer(s):
False
Correct Answer(s) (in green):
TRUE FALSE
Question 17:
The _______________ school was very influencial during the Reagan Administration and continues to this day to be an important part of monetary considerations.
A tight money policy (high interest rates) will _________ the value of the dollar, reduce exports, slow the American economy, but will attract a return of American dollars spent for imports.
_____________ argue that requiring the Fed to operate with a “monetary rule” for money growth at the same rate as increases in real GDP would be very wise.
Type: Multiple Choice
Points Awarded: 1/1Your Answer(s):
Monetarists
Correct Answer(s) (in green):
Monetarists Keynesians All the above None of the above