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Suppose you get a tax refund of $20000 and instead of spending it on items that had been on your wish list for two years, you put it all in

   Suppose you get a tax refund of $20,000 and instead of spending it on items that had been
                            on your wish list for two years, you put it all in your checking account at the First
                            National Bank of Urbana. And if that deposit allows the bank to loan out $17,000, then
                            the legal reserve requirement must be

a.0.15 percent

b.0.85 percent

c.1.5 percent

d.8.5 percent

e.15 percent

92.              Suppose you get a tax refund of $20,000 and instead of spending it on items that had been
                            on your wish list for two years, you put it all in your checking account at the First
                            National Bank of Urbana. And if that deposit allows the bank to loan out $17,000, then
                            the potential money multiplier must be

a.0.067

b.0.117

c.0.667

d.1.176

e.6.667

93.              If the potential money multiplier in the U.S. is 4, then a simple $1 increase in demand
                            deposits—say a young child opening up her very own checking account—can
                            potentially create demand deposits (including the child’s $1) of

a.$40.00

b.$4.00

c.$2.50

d.$0.40

e.$0.25

94.              If the potential money multiplier in the U.S. is 5, then a $1,000 increase in demand
                            deposits -- your earnings as a tutor in economics -- can potentially create demand
                            deposits (including your $1,000) of

a.$200

b.$500

c.$2,000

d.$5,000

e.$50,000

95.              If the potential money multiplier in the U.S. is 4, then a $2,000 increase in demand
                            deposits when banks hold excess reserves will result in which of the following?

a.the money supply will decrease by $8,000

b.the money supply will remain unchanged because the excess reserves will cancel out
the potential loans

c.the money supply will increase by $8,000

d.the money supply will increase by more than $8,000

e.the money supply, if it increases at all, will increase by less than $8,000

96.              Suppose the economy is in a prosperity phase of the business cycle. Employment is high
                            and in the month of August, new demand deposits amounted to $15,000 billion, which
                            supported a total increase (including the $15 billion) of $75,000 billion, which is the
                            maximum allowable. The potential money multiplier, then,

a.must be 5

b.must be 2

c.must be 0.50

d.must be 0.20

e.cannot be determined from the information given

97.              Which of the following is not a financial intermediary?

a.a federally-chartered bank

b.a state-chartered bank

c.a savings and loan association

d.a credit union

e.the Federal Deposit Insurance Corporation

98.              Which of the following statements about the FDIC is untrue?

a.It sets the legal reserve requirement.

b.It conducts bank audits and examinations.

c.It provides demand deposit insurance for participating banks.

d.It helps prevent bank failures.

e.It is a government agency.

99.              Which of the following statements about the FDIC is untrue?

a.The FDIC conducts bank audits and examinations.

b.The FDIC helps prevent bank failures.

c.The FDIC is owned by member banks.

d.The FDIC provides demand deposit insurance for participating banks.

e.The FDIC was created in 1933.

100.              Which of the following statements about the FDIC is untrue?

a.The FDIC helps prevent bank failures.

b.The FDIC was created after the surge in bank failures in the 1980s.

c.The FDIC is a government agency.

d.The FDIC will reimburse depositors for their losses up to $250,000 per demand
deposit account.

e.The FDIC conducts bank audits and examinations.

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