Macroeconomics

‭7. What is the primary function of the monetary policy tool known as "reserve requirement"?‬

‭A.‬ ‭It regulates the interest rates offered by banks.‬ ‭B.‬ ‭It controls the amount of money banks must hold in reserve.‬ ‭C.‬ ‭It determines the stock market performance.‬ ‭D.‬ ‭It influences government spending.‬ ‭8. A fractional-reserve banking system implies that:‬

‭A.‬ ‭a bank cannot lend out all of its deposits.‬ ‭B.‬ ‭commercial banks are subject to auditing by the central bank at any point in time.‬

‭C.‬ ‭the central bank implements the economy’s fscal policy.‬ ‭D.‬ ‭each loan must be smaller than 20% of the bank’s reserves.‬

‭9. Which of the following is recorded as a liability on a bank’s balance sheet?‬

‭A.‬ ‭Loans‬ ‭B.‬ ‭Deposits‬

‭C.‬ ‭Excess reserves‬ ‭D.‬ ‭Offce buildings‬ ‭10. Which of the following causes the money supply to increase?‬

‭A.‬ ‭An increase in the discount rate‬ ‭B.‬ ‭An increase in corporate taxes‬ ‭C.‬ ‭A decrease in the required reserve (rr)‬ ‭D.‬ ‭A sale of bonds by the Fed‬

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