. Assume that Smith deposits $600 in currency into her checking account in the X

Question

. Assume that Smith deposits $600 in currency into her checking account in the XYZ Bank. Later that same day Jones negotiates a loan for $1,200 at the same bank. In what direction and by what amount has the supply of money changed?
A. Decreased by $600.
B. Increased by $1,800.
C. Increased by $600.
D. Increased by $1,200.

Refer to the data. Assuming the bank loans out all of its remaining excess reserves as a checkable deposit, and has a check cleared against it for that amount, its reserves and checkable deposits will now be:
A. $25,000 and $122,000 respectively.
B. $22,000 and $110,000 respectively.
C. $32,000 and $115,000 respectively.
D. $22,000 and $105,000 respectively.

3. If the reserve requirement is 10 percent, what amount of excess reserves does a bank acquire when a business deposits a $500 check drawn on another bank?
A. $450.
B. $400.
C. $5,000.
D. $550.

5)If actual reserves in the banking system are $50,000, excess reserves are $5,000, and checkable deposits are $225,000, then the monetary multiplier is:
A. 10.
B. 4.
C. 5.
D. 2.

Assets Liabilities and Net Worth Reserves $27,000 Checkable Deposits $110,000 Loans 50,000 Securities 33,000 Property 200,000 Stock Shares 200,000

Explanation / Answer

Answer :- 1. ) D. increased by $1,200

2.) B. $22,000 and $110,000 respectively.

3.) A. $450.

4.) A. $0 billion.

5.) C. 5.

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