Question 1

Peter deposits $100 cash into his account at a commercial bank.Has the amount of money supply changed? Explain.

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Question 2

Futures Bank has $5,000 in excess reserves and a reserve ratio of 10%.Now suppose Futures Bank makes a loan of $5,000 to Sandra and she writes a cheque to Scott who a)deposits the cheque into his account at Futures Bank.What is the amount of excess reserves for Futures Bank? Explain.b)deposits the cheque into his account at Swaps Bank.What is the amount of excess reserves for Futures Bank? Explain.

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Question 3

Define money.

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Question 4

What is fractional reserve banking?

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Question 5

What will happen to the money multiplier,if:
a)target reserve ratio decreases
b)people hold more cash
c)people do not take out loans

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a)target...

Question 6

What is the prime function of money? Explain.

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Question 7

Southland Bank has $10,000 in excess reserves and $25,000 in actual reserves,if the target reserve ratio is 20%,what are the values of demand deposit and outstanding loans? Assume that the bank has no other assets or liabilities.

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Question 8

"A decrease in notice deposits will decrease M1,M2,and M3." Evaluate this statement.

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Question 9

Explain how an increase in the amount of cash that people hold will lead to a smaller money multiplier.

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Question 10

List five types of money used throughout history.

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Question 11

Suppose the following information for Trust Bank,reserves are $1,000 and the target reserve ratio is 25%.If the bank is fully loaned up,what is the amount of loans? Assuming that the bank has no other assets or liabilities.

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Question 12

Suppose Highland Bank has deposits of $50,000 and target reserves are equal to actual reserves of $10,000.
a)What is Highland Bank's target reserve ratio?
b)Now suppose Highlands target reserve ratio is 25%.Will the bank be over- or under-reserved?

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Question 13

Explain why bank reserves are not a part of money supply.

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Question 14

Explain why a bank would not like to hold excess reserves.

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Question 15

Explain why a credit card is not money.

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Question 16

East Bank has $10,000 in reserves,deposits of $20,000 and a target reserve ratio of 20%.How much is East Bank under- or over-reserved? What should East Bank do?

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Question 17

List the six characteristics of money?

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Question 18

List some of the potential problems of using gold coins as money.

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Question 19

Suppose the following information for Ables Bank:
  If the bank was fully loaned up,what is the value of outstanding loans and deposits for Ables Bank if the target reserve ratio is
a)10%
b)25%
c)50%

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...

Quiz 8: Money and Banking