Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 27, Problem 6MCQ
To determine
To find:
The factor that does not assist commercial banksin creating money.
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When banks have deposits in checking accounts with the Fed, these deposits for the bank are __________________ of the commercial bank
a.
Liabilities
b.
Assets
c.
Net Worth
d.
Equity
When a bank makes a loan what happens to the amount of money in deposits it holds and to the quantity of money in the economy?
A. Bank deposits decrease, the quantity of money increases.
B. Bank deposits do not change, the quantity of money does not change.
C. Bank deposits decrease, the quantity of money does not change.
D. Bank deposits do not change, the quantity of money increases.
Submit
Subtracting the value of a bank's liabilities from the value of its assets leaves its
A. deposits.
B. capital.
C. net income.
D. gross income.
Chapter 27 Solutions
Foundations of Economics (8th Edition)
Ch. 27 - Prob. 1SPPACh. 27 - Prob. 2SPPACh. 27 - Prob. 3SPPACh. 27 - Prob. 4SPPACh. 27 - Prob. 5SPPACh. 27 - Prob. 6SPPACh. 27 - Prob. 7SPPACh. 27 - Prob. 8SPPACh. 27 - Prob. 9SPPACh. 27 - Prob. 10SPPA
Ch. 27 - Prob. 11SPPACh. 27 - Prob. 12SPPACh. 27 - Prob. 13SPPACh. 27 - Prob. 1IAPACh. 27 - Prob. 2IAPACh. 27 - Prob. 3IAPACh. 27 - Prob. 4IAPACh. 27 - Prob. 5IAPACh. 27 - Prob. 6IAPACh. 27 - Prob. 7IAPACh. 27 - Prob. 8IAPACh. 27 - Prob. 9IAPACh. 27 - Prob. 10IAPACh. 27 - Prob. 11IAPACh. 27 - Prob. 1MCQCh. 27 - Prob. 2MCQCh. 27 - Prob. 3MCQCh. 27 - Prob. 4MCQCh. 27 - Prob. 5MCQCh. 27 - Prob. 6MCQCh. 27 - Prob. 7MCQCh. 27 - Prob. 8MCQ
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- Gold and silver have been historically used as materials for making commodity money (coins) by many different human cultures throughout history. This was because they were difficult to obtain and less prone to rust than other metals. In other words, they could perform one of the functions of money better than other metals. Which function is that? Which function of money do gold and silver perform better than other metals? a. Unit of account b. Store of value c. Medium of exchange d. Standard of deferred paymentarrow_forwardWhich of the following is money? A. A check is money because while it is in circulation the quantity of money increases by the amount of the check. B. Deposits are money, checks are not money, and credit cards are not money. C. A credit card is money because it allows you to take a loan at the instant you buy something. D. Currency is money and credit cards are money because they are means of payment, but deposits are not money.arrow_forwardExplain each of the following types of deposit accounts: a.demand deposit b.certificate of deposit c.money market demand accountarrow_forward
- 1Money is created when A. a depositor deposits money at the bank. B. a bank grants a loan to a customer. C. someone lends money to a friend or a family member. D. people use money to pay for stuff they buy from one another.arrow_forward1. The opportunity cost of holding money.arrow_forwardUse a diagram to describe the structure of a bank bill.arrow_forward
- 1. A banks assets can be described as the a. Value of the loans and the estimates about the risk that customers will not repay those loans b. Value of the loans and the estimates about the risk that customers will repay those loans c. Value of the loans and the estimates about the risk that firms will purchase those loans d. Value of the loans and the estimate about the risk that firms will repay those loans 2. Banks are able to create money in the economy if a. Banks loan out there excess reserves b. Banks do not loan out part of their excess reserves c. Banks hold all of their deposits as required reserves d. Banks purchase US government securities with all of their excess reserves 3. The characteristic of money that is acceptable to make purchases today that will be paid in the future is known as a a. Store of value b. Standard of deferred payment c. Unit of account d. Transaction cost arrow_forwardAn account issued by banks yielding a market rate of interest with a minimum balance requirement and a limit on transactions is a Select one: a. certificate of deposit. b. money market deposit account. c. savings deposit. d. time deposit.arrow_forwardWhich of the following is true about banks? Select one: a. The interest rate banks charge when they lend is the same they pay for the deposits they receive. b. Banks are financial institutions through which savers can directly provide funds to borrowers. c. Typically, banks receive few but big deposits, which they then use to make many small loans. d. Through the checking accounts they facilitate, banks provide a medium of exchange.arrow_forward
- A bank can make profit by: a)borrowing money from the government at 0% interest. b)giving you a particular interest return on your savings and then loaning out the same money at a lower rate of interest. c)giving you a particular interest return on your savings and then loaning out the same money at a higher rate of interest. d)storing and locking away all the deposits made by consumers.arrow_forwardWhat are bank reserves? a.Deposits that are held in the form of gold reserves b.The fraction of deposits kept as currency that are not used for lending purposes c.The value of the owner’s equity in the bank d.The value of investments a bank keeps in excess of the value of deposits e.The sum of all loans a bank makes to borrowersarrow_forwardA bank is an entity that A) qualifies for FDIC deposit insurance B c) accepts demand deposits D all these answers are correct E makes business loans channels funds from savers to borrowers.arrow_forward
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