Economics Practice MCQ Page 30

Multiple Choice questions for Economics in the sets of 10 each on one page with questions and answers. All sets are useful in the preparation of subject tests for employment or admission.
Question: 1744   The discount rate is the
  1. reduced interest rate banks give to their largest customers.
  2. interest rate that banks pay on deposits.
  3. interest rate that Fed pays on the deposits of banks.
  4. interest that the Fed charge on loans to banks.
  5. interest rate that banks charge one another for loans.
Question: 1747   Government deposit insurance cut the link between the ability of a bank to attract deposits and
  1. the money supply .
  2. interest rates.
  3. the real estate market.
  4. bank performance.
Question: 1748   The monetary base includes
  1. only vault cash .
  2. only vault cash plus deposits at the Fed.
  3. only vault cash plus currency held by the public.
  4. only reserve plus currency held by the public.
  5. only currency held by the public and demand deposits.
Question: 1749   A sale of a Treasury bill by the Fed always
  1. increases bank reserves.
  2. reduce bank reserves.
  3. increase currency held by the public or vault cash.
  4. increases the monetary base.
  5. reduces the monetary base.
Question: 1807   A sale of a Treasury bill by the public or
  1. increase bank reserves .
  2. reduces bank reserves.
  3. `increases currency held by the public or vault cash.
  4. increases the monetary base .
  5. reduces the monetary base.
Question: 1808   In order to regular banking industry.there are restrictions on all of the following except.
  1. bank capital requirements.
  2. the riskiness of bank assets and liabilities.
  3. the size of total bank deposits.
  4. entry into the banking industry.
Question: 1809   If the banking system gets $100 in new reserves from the Fed and the required-reserveratio is 0.2 then the maximum amount by which total deposits in the economy can increase is
  1. $1.000.
  2. $500.
  3. $100.
  4. $80.
  5. impossible to determine from the data given.
Question: 1810   If the reserve ratio that banks desire to maintain is 0.12.then deposit multiplier is
  1. 12.
  2. 10.`
  3. 8.3.
  4. 0.83.
  5. impossible to determine from the data given.
Question: 1811   Excess reserves are
  1. the difference between actual and required reserves.
  2. the difference between deposits and reserves.
  3. the reciprocal of the deposit multiplier.
  4. the reciprocal of the money multiplier.
  5. the difference between actual and desired reserves.
Question: 1812   The actual effect of a monetary-base expansion on the money supply is
  1. smaller than the deposit multiplier because of required reserves.
  2. larger than the deposit multiplier because of required reserves.
  3. smaller than the deposit multiplier because of cash leakages.
  4. larger than the deposit multiplier because of cash leakages.
  5. smaller than the deposit multiplier because of excess reserves.
Question: 1813   Which of the following is not a financial intermediary?
  1. Federal Deposit Insurance Corporation.
  2. Commercial bank.
  3. Saving and loan.
  4. Insurance company.
Question: 1814   If the banking system obtains $100,000 in new deposits.what will total deposits be after the multiplier expansion process if r=0.25?
  1. $25.000.
  2. $125.000.
  3. $300.000.
  4. $400,000.

Answers to the questions of Economics on this page

Following list gives the correct choice for the answer of the Economics mcqs.
1744 . D       1747 . D       1748 . D       1749 . E       1807 . E       1808 . C       1809 . B       1810 . C       1811 . A       1812 . C       1813 . A       1814 . D      

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