Consider a bank with a national charter that is part of the Federal Reserve System. It will be primarily A. Regulated by the OCC B. Regulated by the...

1. Consider a bank with a national charter that is part of the Federal Reserve System. It will be primarily

1. Regulated by the OCC

2. Regulated by the Fed

3. Regulated by the FDIC

4. Regulated by the National Bank of the United States

1. The federal funds rate is the interest rate in the market for

1. Federal government loans

2. Loans of reserves between banks

3. Loans from the Fed to banks

4. Federal agency securities

1. Which of the following are the most liquid assets on a bank balance sheet?

1. Demand deposits

2. Reserves

3. Loans from the Federal Reserve

4. Loans from the Federal Reserve

1. Say that you deposited $100 in cash that you found in an abandoned house in your checking account. Which of the following would happen to the reserves in your bank, assuming a ten percent reserve requirement?

1. Required reserves would increases by $100

2. Actual reserves would rise by 100

3. Excess reserves would increase by $ 100

4. Required reserves would fail by $10

1. The “discount loans” account

1. Is an asset to the Fed and an asset to the banking system

2. Is an asset to the Fed and a liability to the banking system

3. Is a liability to the Fed and an asset to the banking system

4. Is a liability to the Fed and a liability to the banking system

1. Which of the following would most likely be true under the Lombard system?

1. The Fed charges 2.5% for loans to banks but pays more than a 2.75% premium on bonds it buys from banks.

2. Banks charge 3.5% on loans to each other, while the discount rate is 4%

3. The federal funds rate is 3.5%, while banks charge each other 4% for loans

4. The discount rate is 3.5, while banks charge each other 4% for loans

1. Which one of those ratios did we say changed wery little, no matter what was going in the banking industry or the economy?

1. Return on equity

2. Leverage ratio

3. Net interest margin

4. Efficiency ratio

1. An economist looks at a bank’s balance sheet, then subtracts total liabilities from total assets and divides the result by total assets. The economist is analyzing the bank’s

1. Interest rate risk

2. Liquidity (risk)

3. Credit risk

4. Leverage risk

1. If we want to know if a bank will be able to handle unforeseen changes in interest rates, we calculate

1. leverage risk

2. Interest rate risk

3. Credit risk

4. The GAP ratio

1. An economist looks at a bank’s balance sheet, then subtracts total liabilities from total assets and divides the result by total assets. The economist is analyzing the bank’s

1. Interest rate risk

2. Liquidity (risk)

3. Credit risk

4. Leverage risk

1. 1913 is notable in monetary economics because

1. That’s when the Federal Reserve was created

2. The marked the end of the Free Banking Era

3. That marked the beginning of the dual Banking system

4. All of the above are true

1. The Board of Governors

1. Receives all its funding from Congress

2. Is composed of seven members

3. Owns the Federal Reserve- on paper, at least

4. Has a chairman whose term coincides with that of the President of the United States

1. Select all of the situations where the bank described is in violation of reserve laws.

Assume in each case that the bank has $60,000 in liabilities, $1000 in US government bonds, $15,000 in checking, $700 Deposit in the Fed, and $5000 in saving accounts. Anything not given should be assumed to be $0.

1. The bank has actual reserves of $1500

2. The bank has cash in the amount of $825

3. The bank finds that its excess reserves are a negative number

4. The bank has cash in its vaults equal to the amount of its deposit in Fed

5. The band keeps 6% of its demand deposits as cash.

6. The entire economy has $2000 in cash, 10% of which is held by this bank and the rest is held by the public

7. None of these indicate violation of reserves laws.

1. Which of the following is NOT true about tight money policy?

1. We do it to fight inflation

2. A higher reserve requirement ratio could be used to enact it

3. Its goal is to increase deman

4. The Fed sells in the open market to do so

1. A famous and filthy rich chef brags in an interview that he keeps his riches in many different bank accounts across the country. “After all,” he says, “if your bank goes under, you are only guaranteed $250,000 to be paid back to you.” Why would most economists disagree with this famous chef?