Which of the following evets will cause a reduction in the total amount of reserves in the banking system, all else the same?Group of answer choicesBrad buys something from the grocery store using his ATM card.Geroge withdraws $1,000 for his checking account and pays it to Susan, who deposits it in her at her account in Bank B.Ian withdraws $10,000 from his deposit account and keeps it under his mattress.Someone pays back his loan to Bank A by writing a check on his account at Bank B.

If banks are currently holding zero excess reserves and the Fed lowers the required reserves ratio, which of the following will happen?Group of answer choicesBanks will have a reserve deficiency.Banks will have positive excess reserves.Banks will extend fewer loans.Banks will call in some of their loans to meet the reserve deficiency.

The actual change in the money supply as a result of an increase in excess reserves will be less than the maximum change if banksGroup of answer choicesdo not lend out all of their excess reservesborrow from the Federal Reservesell some of their government securities to the Federal Reservelend only their excess reserves

If households in the economy decide to take money out of checking account deposits and put this money into savings accounts, this will initiallyQuestion 5Answera.decrease M1 and decrease M2.b.increase M1 and decrease M2.c.decrease M1 and not change M2.d.decrease M1 and increase M2.

5. When $1 million is deposited at a bank, the required reserve ratio is 20 percent, and the bank chooses not to hold any excess reserves but makes loans instead, then, in the bank's final balance sheet A) the assets at the bank increase by $800,000. B) the liabilities of the bank increase by $1,000,000. C) the liabilities of the bank increase by $800,000. D) reserves increase by $160,000. 6. Which of the following statements are TRUE? A) A bank's assets are its sources of funds. B) A bank's liabilities are its uses of funds. C) A bank's balance sheet shows that total assets equal total liabilities plus equity capital. D) A bank's balance sheet indicates whether or not the bank is profitable. 7. Which of the following statements is FALSE? A) A bank's assets are its uses of funds. B) A bank issues liabilities to acquire funds. C) The bank's assets provide the bank with income. D) Bank capital is recorded as an asset on the bank balance sheet.

When the Reserve Bank sells government securities, the banks'Group of answer choicesreserves will decrease and lending will contract, causing a decrease in the money supply.reserves/deposit ratio will increase and lending will expand, causing an increase in the money supply.reserves will increase and lending will expand, causing an increase in the money supply.reserves will increase and lending will contract, causing no change in the money supply.reserve requirements will increase and lending will contract, causing a decrease in the money supply.