ECO 372T Wk 5 - Apply: Quiz

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ECO 372T Wk 5 - Apply: Quiz

(Advanced analysis) Assume the equation for the total demand for money is L = 0.4Y + 80 − 4i, where L is the amount of money demanded, Y is gross domestic product, and i is the interest rate. If gross domestic product is $200 and the interest rate is 10 percent, what amount of money will society want to hold?

Multiple Choice

Item in Balance Sheet    Amount

1) Treasury Deposits      $7

2) Reserves of Commercial Banks31

3) Federal Reserve Notes       275

4) Loans to Commercial Banks     3

5) All Other Assets66

6) Securities   241

7) All Other Liabilities and Net Worth  7

The table shows items and figures taken from a consolidated balance sheet of the 12 Federal Reserve Banks. All figures are in billions of dollars. In this balance sheet, there would be assets of

Multiple Choice

$317 billion.

$309 billion.

$341 billion.

$310 billion.

A reserve requirement of 10 percent means a bank must have at least $300 of reserves if its checkable deposits are

Multiple Choice

•      $3,000.
•      $30.
•      $300.
•      $30,000.

Suppose a credit union has checkable deposits of $400,000 and the legal reserve ratio is 10 percent. If the institution has excess reserves of $8,000, then its actual reserves are

Multiple Choice

•      $48,000.
•      $32,000.
•      $8,000.
•      $40,000.

If nominal GDP is $800 billion and, on average, each dollar is spent four times in the economy over a year, then the quantity of money demanded for transactions purposes will be

Multiple Choice

•      3,200
•      200
•      800
•      600
•      400