Question 1

Nita deposits a check for $750 drawn against Home Federal Bank into her account at Village Bank. Which pair of the T-accounts below shows this transaction on the respective bank's balance sheets?

Accepted Answer

A)   
B)   
C)   
D)

Question 2

Assume that the required reserve ratio is 10%. An increase of $1,000 in the banking system's excess reserves may result in a total expansion of new deposits for the banking system as a whole by as much as

Accepted Answer

A)  $1,000. 
B)  $9,000. 
C)  $10,000. 
D)  $100,000.

Question 3

Which of the following is true regarding the interest rate earned on the reserves that bank's keep at the Fed?

Accepted Answer

A)  These reserves earn no interest. 
B)  It is relatively low. 
C)  It varies depending on the federal funds rate. 
D)  It is equal to the discount rate.

Exam 24: The Aggregate Demandaggregate Supply Model

Nita deposits a check for $750 drawn against Home Federal Bank into her account at Village Bank. Which pair of the T-accounts below shows this transaction on the respective bank's balance sheets?

Assume that the required reserve ratio is 10%. An increase of $1,000 in the banking system's excess reserves may result in a total expansion of new deposits for the banking system as a whole by as much as

Which of the following is true regarding the interest rate earned on the reserves that bank's keep at the Fed?