A $20 Federal Reserve note is an asset to a commercial bank if it is currently i
ID: 1100521 • Letter: A
Question
A $20 Federal Reserve note is an asset to a commercial bank if it is currently in the banks vault
A bank can increase the money supply by the amount of total reserves it holds. False
A bank finds itself short of required reserves and therefore borrows from another commercial bank. The interest rate on this loan is the federal funds rate
A bank that borrows from the Fed at 3 percent annual interest hopes to charge more than 3 percent for its loans
A Bank with $1 Million in deposits and $50,000 in excess reserves, facing a required reserve ratio of 20 percent, holds total reserves of $250,000. True
A fall in the discount rate will usually encourage bank borrowing from the Fed False
A movement upward and to the left along the money demand curve is caused by an increase in the interest rate
A single bank can increase the money supply by the increase in its excess reserves times the simple money multiplier. False
A single bank can increase the money supply by the increase in its excess reserves time the simple money multiplier False
All depository institutions are subject to the Fed
Explanation / Answer
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