Many states had their own insurance fund to protect depositors. The critical problem with these state funds is:
A. they do not have regulators as knowledgeable as the regulators at FDIC.
B. they are monopolies in their own state and extract extremely high prices for the insurance they provide.
C. no state fund is large enough to withstand a run on all of the banks it insures.
D. they are highly inefficient they cannot achieve the economies of scale a federal fund can achieve.
Answer: A
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Federal Reserve notes are
A) paper currency. B) checks issued by the U.S. government. C) savings bonds. D) travelers' checks.
Suppose that in a country the total holdings of banks were as follows: required reserves = $45 million excess reserves = $15 million deposits = $750 million loans = $600 million Treasury bonds = $90 million Show that the balance sheet balances if these
are the only assets and liabilities. Assuming that people hold no currency, what happens to each of these values if the central bank changes the reserve requirement ratio to 2%, banks still want to hold the same percentage of excess reserves, and banks don't change their holdings of Treasury bonds? How much does the money supply change by?
In a simplified banking system subject to a 25 percent required reserve ratio, a $1,000 open-market purchase by the Fed would cause the money supply to:
A. increase by $1,000. B. decrease by $1,000. C. decrease by $4,000. D. increase by $4,000.
Empirical evidence suggests that usury laws
A) help poor consumers by lowering the interest rate they pay. B) hurt poor consumers by limiting their ability to borrow. C) keep interest rates low. D) limit the amount borrowed by wealthier consumers.