Reserves of member banks appear on the Fed's balance sheet as liabilities.

Reserves of member banks appear on the Fed's balance sheet as liabilities.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 2

As discussed in the text, a bank can extend new loans equal to the amount by which its excess reserves increase.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 3

In a simplified banking system, the money multiplier falls as the required reserve ratio rises.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 4

In a system in which all banks have a uniform reserve requirement, the money multiplier is equal to 1 divided by the required reserve ratio.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 5

If the Federal Reserve wishes to increase the money supply it should decrease the discount rate and/or decrease the required reserve ratio and/or buy government securities on the open market.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 6

A decrease in the required reserve ratio will increase banks' excess reserves and decrease the money multiplier.
 a. True
  b. False
  Indicate whether the statement is true or false

QUESTION 7

In a simplified system where all banks have uniform reserve requirements and checkable deposits are the only form of money, the money multiplier is equal to 1 over the required reserve ratio.
 a. True
  b. False
  Indicate whether the statement is true or false