Question

1- what is the mean purpose of reserve requirements is to :

a: provide stability in the banking system

b: provide liquidity in the banking system

c: give the federal reserve leverage in its conduct of monetary controal

d: prevent excessive competion in the banking inustry

2- improved expectations about future sales and profits will

a: shift the investment demand curve rightward

b; shft the investment demand curve leftwared

c: cause a movement down the investment demand curve

d: cause movement up the investment demand curve

3- when curency is deposited into a demand deposit account

a: it is a sign that a run on the bank has begun

b: the money supply will fall

c: the federal reserve system must borrow ;

d: bank reserves increase

e: it is no longer serving as a standared of balue

4- Other things unchanged a decrease in the legal reserve requirement will

a: decrease the quantity of free reserves

b: signal the fed "s intention of pursuing a "tight money" policy

c: devease the total reserves of the banking system

d: increase the size of the money multiplier

e: cause banks to lend at higher interest rates

5- in the Keynesian liquidity preference theory of interest determination the interest rate plays the role of equilibrating

a: the supply and demand for inventories

b: the supply and demand for money

c: desired savings and desired investment

d: actual saving and actual investment

Answer 1

Q1. Option b. Provide liquidity in the banking system.

Liquid assets are those that can be converted with cash quickly if needed to meet financial obligations.

Liquid assets include cash, central bank Reserves etc.

Q2. Option A.

Shift the inveInvest demand curve Rightwards

If executives become more optimistic about future sales and profits, the investment demand curve will shift to the right.

Q3. Option D. Bank reserves increase.

The greater the amount of demand deposits the more cash the institution reserves.

Q4. Option D. Increase the size of the money multiplier.

The multiplier is the Expansion of a country's money supply that banks lend.

It is the money used to create more and calculated by dividing the banks deposits by the reserve requirements.

Q5. Option B. The supply and demand for money.

The real demand for money is defined as the nominal amount of money demanded divided by the price level.

For a given money supply,Income interest rate pairs at which money demand equals money supply.