If a member of the non-bank public purchases a government bond from the Fed with currency:

• A) Reserves will fall
• B) Monetary base will fall and reserves will remain unchanged
• C) Reserves will remain unchanged
• D) The monetary base will fall

In the simple model of multiple deposit creation in which banks do not hold excess reserves, the increase in checkable deposits equals the product of the change in reserves and the:

• A) Inverse of the excess reserve ratio
• B) Inverse of the simple money multiplier
• C) The simple money multiplier
• D) Discount rate

Which is central bank primary policy instrument?

• A) The reserve requirement
• B) All of above
• C) The discount rate
• D) The target federal funds rate

Of the four players in the money supply process, most observers agree that in the simple money supply model the most important player is:

• A) The Federal Reserve System
• B) Depositors
• C) Borrowers
• D) Banks

Currency-to-deposit ratio is a factor that affects the quantity of money. This factor is controlled by which of the following?

• A) Central bank
• B) Non bank public
• C) Commercial banks
• D) Bank regulators

----------Interest rate charged on overnight loans between banks?

• A) None of above
• B) Target Federal Funds Rate
• C) Discount rate
• D) Reserve requirement

If a bank has excess reserves of $15,000 and demand deposit liabilities of $80,000, and if the reserve requirement is 20%, then the bank has total reserves of:

• A) $11,000
• B) $31,000
• C) $26,000
• D) $20,000

Required reserve-to-deposit ratio is a factor that affects the quantity of money. This factor is controlled by which of the following?

• A) Commercial banks
• B) Non bank public
• C) Central bank
• D) Bank regulators

The equation of exchange is written by --------?

• A) Marshall
• B) Milton Friedman
• C) Irving Fisher
• D) None of above

Which type of credit is used for short term basis by the central bank?

• A) Secondary credit
• B) Seasonal credit
• C) None of above
• D) Primary credit,

----------- make the revenues from foreign sales and the Cost of purchasing imported goods hard to predict?

• A) Semi variable exchange rate
• B) None of give option
• C) Fixed exchange rate
• D) Floating exchange rate

Bank wishes to hold excessive reserves of 7% of deposits, it would keep reserves of 9% of $95,000, what amount will be available for the loans?

• A) 89300
• B) 86450
• C) 79800
• D) None of give

Which is not the characteristic of creating a successful Central bank?

• A) Independent of political pressure
• B) Accountable to the public
• C) Transparent in its policy actions
• D) Always follow the Government policies

Which kind of credit by central bank is utilized by the Small agricultural banks to help in managing the cyclical nature of farmers’ loans?

• A) Secondary credit
• B) None of above
• C) Seasonal credit
• D) Primary credit