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In a 100-percent-reserve banking system, banks: A) can increase the money supply. B) can decrease the money supply. C) can either increase or...
1. In a 100-percent-reserve banking system, banks:A) can increase the money supply.B) can decrease the money supply.C) can either increase or decrease the money supply.D) cannot affect the money supply.2. If many banks fail, this is likely to:A) cause surviving banks to lower their ratios of reserves to deposits.B) cause surviving banks to raise their ratios of reserves to deposits.C) have no effect on the ratio of reserves to deposits in surviving banks.D) cause surviving banks to hold less currency.3. Money that has no value other than as money is called ______ money.A) fiatB) intrinsicC) commodityD) government4. Excess reserves are the reserves that banks keep:A) in their vaults.B) at the central bank.C) to meet legal reserve requirements.D) above the legally required amount.5. Liabilities of banks include:A) reserves.B) currency in the hands of the public.C) loans to customers.D) demand deposits.6. To prevent banks from using excess reserves to make loans that would increase the money supply, the Federal Reserve could conduct open-market ______ and _____ the interest rate paid on bank reserves.A) purchases; raiseB) purchases; lowerC) sales; raiseD) sales; lower
