+
Related Flashcards
Related Topics
Cards In This Set
| Front | Back |
|
When governement spending exceeds government revenues during a given period of time
|
Budget deficit exists
|
|
What is the effect of deficit spending on interest rates
|
Interest rates rise
|
|
An individual who desires the most liquid asset possible will hold
|
Currency
|
|
A corporate bond is not as liquid as cash because the bond
|
Cannot be converted to purchasing power either until it matures or is sold to another investor
|
|
When the price level goes up, the purchasing power of the dollar
|
Falls
|
|
Which of the following is included in M2
|
Money market deposit accounts and small denomination certificates of deposit
|
|
Which of the following is NOT a function of the fed?
|
Lending funds to credit worhy private firms
|
|
The legal reserves of a commercial bank include
|
Certificates of deposites issued by the bank and vault cash
|
|
Given a required reserve ratio of 20 percent, a commercial bank, that has received a new deposit of%100 can make additional loans of
|
$80
|
|
A bank has a withdrawal of $1,000. if the bank initially had no excess reserves and if there is a 15 percent reserve requirement
|
It must reduce its loands and security holdings by $850
|
|
If the fed wants to reduce reserves in the banking system, it will most likely
|
Sell government securities in the open market
|
|
Other things being equal, if the required reserve ratios is raised from 10 percent to 20 percent
|
Maximum potential value of the money multiplier falls from 10 to 5
|
|
When the required reserve ratio is 20 percent, a fed open market sale of $500,000 in bonds can ultimately lead to a maximum potential reduction in the money supply of
|
$2,500,000
|
|
If a bank needs to borrow reserves on an overnight basis and it does not want to borrow from the fed, it will most likely turn to
|
The federal funds market
|
|
If the FDIC elimminated its insurance program for deposits, then
|
Individual depositors would have more incentive to ascertain the soundness and solvency of the bank
|
