11 May Question1. Suppose total deposits in the First Bank of Commerce
Question
1. Suppose total deposits in the First Bank of Commerce are $200,000 and required reserves are $10,000. Based on this information, the required reserve ratio is: (Points : 5)
.05.
.10.
.20.
20.
2. If instead of bartering, a person uses money to buy a pair of shoes, money is functioning as: (Points : 5)
a unit of account.
a store of wealth.
a medium of exchange.
none of the above.
3. As the interest rate falls, the price of bonds: (Points : 5)
falls.
rises.
remains unchanged.
is undetermined.
4. If the currency-to-deposit ratio is 0.25 and the reserve ratio is 0.15, then the money multiplier will be: (Points : 5)
2.50.
4.
3.125.
6.667.
5. If you are worried that you may need extra cash to pay for your car repairs given the age and condition of your clunker, then you would hold cash for the: (Points : 5)
transactions motive.
precautionary motive.
speculative motive.
impulsive motive.
6. A financial asset is liquid: (Points : 5)
if it can be carried easily from one place to another.
if it can be readily exchanged for another asset or good.
only if it takes the form of cash.
if it is held by the public and earning interest.
7. Refer to the graph depicting the market for loanable funds. If the quantity of savings exceeds the quantity of investment, and all savings are not channeled back into investment, the long-term interest rate in this economy is:
(Points : 5)
5 percent.
3 percent.
1 percent.
none of the above.
8. The interest rate is the price paid for the use of a: (Points : 5)
real liability.
real asset.
financial liability.
financial asset.
9. The short-term interest rate is determined in the: (Points : 5)
loanable funds market.
stock market.
exchange rate market.
money market.
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