Answer the following statements true (T) or false (F)

1. If banks had $10 million in legal reserves, $110 million in check able deposits, and a 10 percent reserve requirement, they would have to reduce check able deposits by $10 million or increase reserves by $1 million.
2. A decrease in reserve requirements immediately increases the money supply.
3. The total check able deposits a bank may have can be determined by dividing its reserves by the reserve requirement.
4. The most liquid measure of the U.S. money supply is M1.
5. Federal Reserve banks stand ready to convert dollars into gold upon demand.
6. The Treasury issues all paper currency today.


1. TRUE
2. FALSE
3. TRUE
4. TRUE
5. FALSE
6. FALSE

Economics

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