Money and Banking

What is the primary characteristic of the fractional reserve banking system described in the text?

In the goldsmiths analogy for fractional reserve banking, what was the crucial idea that allowed them to start creating money?

What does a commercial bank's balance sheet summarize?

When citizens of Wahoo deposit $100,000 in cash into checkable deposits at the new Wahoo bank, what is the immediate effect on the total supply of money in the economy?

A commercial bank has checkable-deposit liabilities of $100,000 and a reserve ratio of 20 percent. What is the amount of required reserves?

According to the chapter, what is the primary purpose of required reserves?

What happens to the Wahoo bank's balance sheet when a $50,000 check is drawn against it and deposited in the Surprise bank, and the check is cleared?

What startling fact is revealed when a commercial bank like the Wahoo bank grants a loan to a borrower like the Gristly company?

What is the maximum amount a single commercial bank in a multibank system can lend?

What happens to the money supply when a commercial bank buys government securities from the public?

What is the monetary multiplier?

If the required reserve ratio is 20 percent, what is the monetary multiplier?

Suppose the banking system has $80 in excess reserves and the reserve ratio is 20 percent. What is the maximum amount of new checkable-deposit money that can be created by the banking system?

In the process of multiple-deposit expansion, what happens to reserves lost by one bank?

What is the relationship between the money creation process and the money destruction process?

In the context of a bank's balance sheet, what two conflicting goals does a banker pursue?

What is the Federal funds rate?

How did the massive conversion of checkable deposits to currency during the bank panics of 1930-1933 affect the nation's money supply?

If a bank has actual reserves of $60,000, checkable deposits of $50,000, and a required reserve ratio of 20 percent, what are its excess reserves?

Why does the banking system as a whole have a greater money-creating potential than a single bank?

If the Federal Reserve sets the reserve ratio to 10 percent, what would be the monetary multiplier?

What is the effect of a borrower repaying a $50,000 loan to a commercial bank?

In the balance sheet for a commercial bank, 'Reserves' are listed as an asset. In the balance sheet for the Federal Reserve, these same reserves are listed as what?

What happens in the first round of money creation after a junkyard owner deposits a newfound $100 bill into Bank A, assuming a 20 percent reserve ratio?

What two factors determine the money-creating potential of the banking system?

A bank has checkable-deposit liabilities of $500,000 and actual reserves of $150,000. If the reserve ratio is 20 percent, how much can this single bank safely lend?

If a bank sells a $10,000 government bond to the public, and the buyer pays by check, what is the immediate effect on the money supply?

In Transaction 2, the Wahoo bank acquires a building for $220,000 and office equipment for $20,000, paying with cash. How does this affect the bank's balance sheet?

If Bank A, with excess reserves of $64, makes a loan for the full amount, and the borrower writes a check that is deposited in Bank C, what is the initial change on Bank C's balance sheet?

How does deposit insurance help prevent bank runs?

If a bank has checkable deposits of $100,000 and is 'fully loaned up' with a reserve ratio of 20 percent, what is the value of its actual reserves?

How will the money-creating potential of the banking system be affected if the required reserve ratio is increased?

The money-creating process described in the chapter relies on which two facts about the economy?

In the balance sheet equation 'Assets = liabilities + net worth', what does 'net worth' represent?

Assume the banking system is fully loaned up and faces a 20 percent reserve ratio. If a customer withdraws $100 in cash from a checkable deposit, what is the potential total reduction in the money supply?

If a bank has required reserves of $20,000 and actual reserves of $110,000, what are its excess reserves?

What is the key difference in lending ability between a single commercial bank and the entire banking system?

If a bank receives a check drawn on another bank, how does the collection of that check affect the receiving bank's balance sheet?

When Bank B in the textbook's example acquires $80 in reserves and deposits, and the reserve ratio is 20 percent, what is the amount of its excess reserves?

Which action by a commercial bank results in the destruction of money?

What does it mean for a bank to have its reserves 'in the Federal Reserve Bank of its district'?

If a banking system with a 25 percent reserve ratio has $100 billion in checkable deposits and $30 billion in reserves, what is the maximum amount of new money the system can create?

A bank's 'vault cash' or 'till money' is counted as part of what?

When a bank grants a loan, it creates a new checkable deposit for the borrower. On the bank's balance sheet, this loan is recorded as what?

If Bank A, Bank B, and Bank C lend out $80, $64, and $51.20 respectively in the first three rounds of money expansion, what is the required reserve ratio?

What is a 'bank panic' or 'run,' as described in the chapter?

A bank's total assets are $500,000 and its net worth is $50,000. What is the value of its liabilities?

If the monetary multiplier is 4, what is the required reserve ratio?

Which of the following would cause the money supply to increase?

If a single bank has $90,000 in excess reserves, why can it not safely lend out more than $90,000?