Mod 25 Flashcard

Front

The reserve ratio is the:

Back

fraction of deposits the banks hold in their vaults.

Front

Banks create money when they:

Back

make loans.

Front

Suppose the reserve ratio is 20%. If Sam deposits $500 into his checking account, his bank can increase loans by:

Back

$400.

Front

Which of the following is a component of BOTH the monetary base and the money supply? bank reserves at the Fed, currency in bank vaults, demand deposits, Treasury securities., currency in circulation

Back

currency in circulation

Front

If a bank has deposits of $100,000, cash on hand of $10,000 and $15,000 on deposit at the Federal Reserve, and the required reserve ratio is 0.20, then the bank:

Back

has excess reserves of $5,000.