Krugman's Economics for AP

Margaret Ray

Chapter 25 Banking and Money Creation - all with Video Answers

Educators

Chapter Questions

Problem 1

Bank reserves include which of the following?
I. currency in bank vaults
II. bank deposits held in accounts at the Federal Reserve
III. customer deposits in bank checking accounts
a. I only
b. II only
c. III only
d. I and II only
e. I, II, and III

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01:37

Problem 2

The fraction of bank deposits actually held as reserves is the
a. reserve ratio.
b. required reserve ratio.
c. excess reserve ratio.
d. reserve requirement.
e. monetary base.

Oluwadamilola Ameobi

Numerade Educator

01:40

Problem 3

Bank regulation includes which of the following?
I. deposit insurance
II. capital requirements
III. reserve requirements
a. I only
b. II only
c. III only
d. I and II
e. I, II, and III

Manik Pulyani

Numerade Educator

02:43

Problem 4

Which of the following changes would be the most likely to reduce the size of the money multiplier?
a. a decrease in the required reserve ratio
b. a decrease in excess reserves
c. an increase in cash holding by consumers
d. a decrease in bank runs
e. an increase in deposit insurance

Kaylee Mcclellan

Numerade Educator

Problem 5

The monetary base equals
a. currency in circulation.
b. bank reserves.
c. currency in circulation - bank reserves.
d. currency in circulation + bank reserves.
e. currency in circulation/bank reserves.

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