5-2 (29-32) Question 29. 29. A bank’s reserve ratio is 10 percent and the bank h

Question

5-2 (29-32)

Question 29. 29. A bank’s reserve ratio is 10 percent and the bank has $2,000 in deposits. Its reserves amount to (Points : 5) $20. $200. $400. $1,800.

Question 30. 30. Table 16-3. The First Bank of Fairfield Assets Liabilities Reserves $2,000 Deposits $10,000 Loans 8,000 Refer to Table 16-3. The reserve ratio for this bank is (Points : 5) 0 percent. 20 percent. 80 percent. 100 percent.

Question 31. 31. Suppose the banking system currently has $400 billion in reserves, the reserve requirement is 10 percent, and excess reserves are $3 billion. What is the level of loans? (Points : 5) $3,603 billion $3,600 billion $3,573 billion $3,570 billion

Question 32. 32. When prisoners use cigarettes or some other good as money, cigarettes become (Points : 5) commodity money, but do not function as a unit of account. commodity money and function as a unit of account. fiat money, but do not function as a unit of account. fiat money and function as a unit of account.

Explanation / Answer

29. Reserve Requirement=10% of Deposits=10% of $2000=$200

30. Reserve Ratio=Reserves/Deposits=$2000/$10000=20%

31. Level of Loans=$400/10%-$400=$4000-$400=$3600, excess reserves are not used for lending.

32. Commodity Money and function as a unit of account for the commodity which is used as a unit of account

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