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Financial Sector
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Financial Sector
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25 Questions

1. If a loan is repaid at a commercial bank
2. Members of the Federal Reserve Board of Governors are rarely subject to political pressure because
3. The main function of the Federal Open Market Committee is
4. A bank’s biggest liability is
5. If the required reserve ratio is 25% and a commercial bank has $2 million in cash, $1 million in government securities, $3 million on deposit at a Federal Reserve bank, and $6 million in demand deposits, its total reserves are
6. Varying the money supply in a economy is beneficial because
7. A valid reason for requiring commercial banks to have reserve requirements is to
8. If interest rates increase, there will be
9. Jack wants to buy a new drum set for his band. He goes to two music stores over the weekend to compare prices. For Jay, money is functioning as
10. If Jack deposits $500, and the reserve ratio is 10%, what will result?
11. Jacob transfers $2,000 from his savings account to his checking account. What effect will this transfer have on the M1, M2, and M3 money supply?
12. The most important function of the Federal Reserve System is
13. If the Federal Reserve lowered the reserve ratio to 5%, what would be the money multiplier?
14. The best explanation of the quantity theory of money would be
15. All of the following will increase the money supply EXCEPT
16. The Federal Reserve System is
17. What is a usual course of action if a firm desires to raise investment funds?
18. All of the following are ways the Federal Reserve can change the money supply EXCEPT
19. Which of the following reflects the two components of the demand for money?
20. If the interest rate decreased, there would be a
21. Which of the following would be considered a major component of the money supply M1?
22. What is one effect an increase in the money supply will have on the economy?
23. According to the preceding list of items, which are considered to be part of the M3 money supply?
24. Use the following information to answer questions 110 and 111: I. mutual funds II. savings deposits III. currency held by consumers IV. checkable deposits V. money market deposit accounts According to the preceding list of items, which are considered to be part of the M1 money supply?
25. If the consumer price index was 90 in 2011 and five years later in 2016 it was 120, the purchasing power of the U.S. dollar fell by

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