A bank has excess reserves to lend but is unable to find anyone to borrow the money This will _________ the size of the money multiplier?

Related Mcqs:

1. Assume that commercial banks are holding excess reserves because business firms and consumers are not willing to borrow money A decrease in the discount rate is likely to ?

   A. increase the money supply because it is now cheaper for banks to borrow from the central bank
   B. decrease the money supply because it will now be more expensive for business firms and consumers to borrow money
   C. Not change the money supply because banks already have excess reserves they cannot lend
   D. Decrease the money supply because it is now cheaper for banks to borrow from the central bank instead instead of buying government securities

2. The difference between a bank’s actual reserves and its required reserves is its?

   A. required reserve ratio
   B. profit margin
   C. excess reserves
   D. net worth

3. Suppose the State Bank purchases a Rs 1,000 government bond from you. If you deposit the entire Rs 1,000 in you bank what is the total potential change in the money supply as a result of the State Bank’s action if the your bank’s reserve ratio is 20 percent ?

   A. Rs 4,000
   B. Rs 5,000
   C. Rs 1,000
   D. Rs 0

4. If people can borrow and lend to perfectly smooth out their lifetime living standards, then ?

   A. transitory income is a good measure of the distribution of living standards
   B. none of these answers
   C. permanent income is a good measure of the distribution of living standards.
   D. life-cycle income is a good measure of the distribution of living standards.
   E. current annual income is a good measure of the distribution of living standards.

5. Suppose the central bank purchases a government bond from a person who deposits the entire amount received from the sale in her bank the money supply will ?

   A. rise by an amount that depends on the bank’s reserve ratio
   B. rise by less than the amount of the deposit
   C. fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio
   D. fall by exactly the amount of the deposit as long as the bank does not change its reserve ratio
   E. be unchanged

6. Suppose Imtiaz moves his Rs1,000 demand deposit from Bank A to Bank B. If both banks operate with a reserve ratio of 10 percent What is the potential change in money supply as a result of Gerard’s action ?

   A. Rs 10,00
   B. Rs 1,000
   C. Rs 9,000
   D. Rs 0

7. If the banks in an economy operate with a reserve ratio of 20 percent then the money multiplier is ?

   A. 4
   B. 20
   C. 25
   D. 5

8. As the required reserve ratio is decreased the money multiplier ?

   A. decreases
   B. remain the same, as long as banks hold no excess reserves
   C. could either increase or decrease
   D. increases

9. If banks and the private sector decide to hold less cash the money multiplier will be ?

   A. Unchanged
   B. Larger
   C. Smaller
   D. Unstable

10. Bank issued a document that authorizes the bearer to receive money from one of its foreign branches or from another bank abroad. What such document is called ?

    A. letter of Credit
    B. Letter of expression
    C. Demand draft
    D. Letter of intent