Tackle the Test: Multiple-Choice Questions

1. Question

   Bank reserves include which of the following?

   
   

   
   

   1. currency in bank vaults

      
      
   
   

   2. bank deposits held in accounts at the Federal Reserve

      
      
   
   

   3. customer deposits in bank checking accounts

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II only

   E.

   I, II, and III

   Bank reserves include which of the following?

2. Question

   The fraction of bank deposits actually held as reserves is the

   A.

   reserve ratio.

   B.

   required reserve ratio.

   C.

   excess reserve ratio.

   D.

   reserve requirement.

   E.

   monetary base.

   The fraction of bank deposits actually held as reserves is the

3. Question

   Bank regulation includes which of the following?

   
   

   
   

   1. deposit insurance

      
      
   
   

   2. capital requirements

      
      
   
   

   3. reserve requirements

      
      
   
   

   A.

   I only

   B.

   II only

   C.

   III only

   D.

   I and II

   E.

   I, II, and III

   Bank regulation includes which of the following?

4. Question

   Which of the following changes would be the most likely to reduce the size of the money multiplier?

   A.

   a decrease in the required reserve ratio

   B.

   a decrease in excess reserves

   C.

   an increase in cash holding by consumers

   D.

   a decrease in bank runs

   E.

   an increase in deposit insurance

   Which of the following changes would be the most likely to reduce the size of the money multiplier?

5. Question

   The monetary base equals

   A.

   currency in circulation.

   B.

   bank reserves.

   C.

   currency in circulation − bank reserves.

   D.

   currency in circulation + bank reserves.

   E.

   currency in circulation/bank reserves.

   The monetary base equals