201Exam2-Fall 2017 ord References Mailings ReviewView 9 Tell me what you want to

Question

201Exam2-Fall 2017 ord References Mailings ReviewView 9 Tell me what you want to do 21) Which of the following lists includes only banks' assets? A) liquid assets, loans, securities, and reserves B) reserves, savings deposits, securities, and loans C) reserves, securities, liquid assets, and savings deposits D) securities, reserves, checkable deposits, and liquid assets E) reserves, checkable deposits, securities, and loans 22) When the Fed buys securities from the public, banks' reserves money A) increase B) increase; decreases and the quantity of D) decrease; decreases E) do not change; increases 23) when the Fed , the quantity of banks' reserves decreases. A) hikes taxes B) buys govenment securities C) sells government securities D) lowers the required reserve ratio E) raises the required reserve ratio

Explanation / Answer

21.

A

Assets are considered as securities, cash, reserves, loans and advances. Though, saving deposits and checking deposits are considered as liability.

22.

A

When, Federal Reserve buys the securities, then it creases the money supply and more money is available for the disbursement in loans and advances. It will increase the quantity of money in the economy.

23.

C

Selling of government securities, will cause money to be sucked out of the bank. Hence, the reserve will come down.

24.

A.

With purchase of government securities by Fed, more money is available for the loans. Hence, monetary base increases.

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