CH 13 Worksheet

CH 13 Study Guide
1. A single bank with $10,000 of reserves and a reserve ratio of 25 percent could support total transactions
account balances of at most
A. $10,000.
B. $5,000.
C. $40,000.
D. $25,000.
2. A single bank with $20,000 of reserves and a reserve ratio of 5 percent could support total transactions account
balances of at most
A. $400,000.
B. $1,000.
C. $100,000.
D. $20,000.
3. Initially a bank has a required reserve ratio of 20 percent and no excess reserves. If $5,000 is deposited into the
bank, then initially, ceteris paribus,
A. This bank can increase its loans by $5,000.
B. This bank can increase its loans by $4,000.
C. Total reserves will increase by $4,000.
D. Required reserves will increase by $5,000.
4. Refer to Table 13.1. If XYZ Bank has a required reserve ratio of 10 percent and loan proceeds are not
redeposited, it can legally increase its loans by
A. $60,000.
B. $40,000.
C. $20,000.
D. $10,000.
5. Refer to Table 13.1. With a required reserve ratio of 20 percent, XYZ Bank could support maximum
transactions account balances of
A. $20,000.
B. $80,000.
C. $300,000.
D. $500,000.
6. Refer to Table 13.1. With a required reserve ratio of 12 percent, XYZ Bank would have excess reserves of
A. $100,000.
B. $48,000.
C. $52,000.
D. $12,000.
7. Refer to Table 13.2. With total reserves of $80,000 and a required reserve ratio of 25 percent, ABC Bank could
support maximum transactions account balances of
A. $20,000.
B. $320,000.
C. $50,000.
D. $2,000,000.
8. If the banking system has a required reserve ratio of 25 percent, the money multiplier is
A. 4.0.
B. 1.25.
C. 0.25.
D. 0.2.
9. If the banking system has a required reserve ratio of 20 percent, the money multiplier is
A. 0.2.
B. 0.8.
C. 1.25.
D. 5.0.
10. If total reserves for a bank are $12,000, excess reserves are $2,000, and demand deposits are $100,000, the
money multiplier must be
A. 20.
B. 15.
C. 10.
D. 5.
11. If the banking system has demand deposits of $100,000, total reserves equal to $15,000, and a required
reserve ratio of 10 percent, the banking system can increase the volume of loans by a maximum of
A. $5,000.
B. $50,000.
C. $85,000.
D. $100,000.
12. Suppose a banking system has a required reserve ratio of 0.10. How much can the money supply increase in
response to a $500 increase in excess reserves for the whole banking system?
A. $50.
B. $500.
C. $5,000.
D. $4,500.
13. Given a required reserve ratio of 0.25, what is the maximum amount by which the money supply can increase
in response to a $200 million increase in excess reserves for the whole banking system?
A. $200 million.
B. $250 million.
C. $500 million.
D. $800 million.