2024 – 1 A bank has a reserve requirement of 10 percent This means that if a customer deposits 10 000 the

 

1. A bank has a reserve requirement of 10 percent. This means that if a customer deposits $10,000, the bank may lend: 
$1000.
$9000.
$10,000.
$11,000.

2. Refer to the graph depicting the market for loanable funds. If the quantity of investment exceeds the quantity of loanable funds (savings) available in the market and some of the investment cannot channel the amount of savings, the long-term interest rate in this economy is: 
5 percent.
3 percent.
1 percent.
none of the above.

3. Holding money for the speculative motive is holding cash for unexpected events. 
True
False

 

4. The formula for the simple money multiplier is: 
1/e where e is the excess reserve ratio.
1/r where r is the reserve ratio.
1/r where r is the required reserve ratio.
1/c where c is the ratio of cash people hold to deposits.