26. Commercial banks act as middlemen between savers and borrowers, therefore th
ID: 1221914 • Letter: 2
Question
26. Commercial banks act as middlemen between savers and borrowers, therefore they are called _____.
a. lenders of the last resort
b. financial intermediaries
c. banker’s banks
d. thrift institutions
e. profitable institutions
27. Which of the following is true of the FDIC?
a. It controls the operations of all commercial banks in the U.S.
b. It exists only in the countries of North America and Europe.
c. It covers depositors against losses up to $500,000 in a bank account.
d. It is a federal agency that insures bank deposits in commercial banks.
e. It is a financial institution that uses cost-plus pricing.
28. Money exchanges are more efficient than barter because:
a. money exchanges do not require a double coincidence of wants.
b. the government guarantees the value of money.
c. money usually has an intrinsic value.
d. money is backed by a physical commodity.
e. opportunity costs are higher with barter trades.
29. When will a shortage occur in a market?
a. When the actual price is lower than the equilibrium price
b. When quantity supplied is greater than the equilibrium quantity
c. When the quantity that consumers are willing and able to purchase decreases
d. When the quantity available at zero price is insufficient to meet demand
e. When a price floor is set in the market
30- In fractional reserve banking:
a. bank assets are less than bank reserves.
b. only a fraction of total deposits are bank reserves.
c. only a fraction of required reserves are investor assets.
d. bank loans are less than bank reserves.
e. a fraction of bank reserves needs to be backed by gold.
31- When do we say that a bank is loaned up?
a. When its debtors don’t want to repay
b. When it is susceptible to a bank panic
c. When its excess reserves equal zero
d. When it is part of a fractional reserve banking system
e. When its required reserves are equal to its excess reserves
32. The balance sheet of a depository institution lists:
a. loans to private individuals as assets.
b. excess reserves as liabilities.
c. checkable deposits as liabilities.
d. required reserves as liabilities.
e. loans from the central bank as assets.
33- For a depository institution, reserves are:
a. assets on the balance sheet.
b. loans to individuals and businesses.
c. borrowings from the central bank.
d. liabilities it owes to customers.
e. checkable deposits.
Explanation / Answer
26 b. financial intermediaries
27 d. It is a federal agency that insures bank deposits in commercial banks.
28 a. money exchanges do not require a double coincidence of wants.
29 a. When the actual price is lower than the equilibrium price
30 b. only a fraction of total deposits are bank reserves
31 c. When its excess reserves equal zero
32 a. loans to private individuals as assets.
33 a. assets on the balance sheet.
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