Question

A. Required reserves are a set percentage of total reserves that must be held in cash in a bank's vault or in the bank’s reserve account at the Fed.

True

False

B. To a bank, a checkable deposit is classified as

an asset.

a liability.

vault cash.

excess reserves.

bank capita

C. Money is an invention of government.

True

False

D. Which of the following statements is true?

A savings deposit is not counted in the most basic, or narrow, definition of the money supply.

M1 is sometimes referred to as transactions money.

Money reduces the transaction costs of making exchanges.

b and c

a, b, and c

Answer 1

A. True, that it is statutory liquid ratio.

B. Liability - it is a liability for a bank, because owner csn anytime withdraw it from the bank. For the owner, its an asset.

C.True, lydians were the first to invent coins and by government fiat or decree, the money is valued. So the value is given by govt.

D. A, b and c are all true. They are all based on measures of money supply- M1, M2, M3 and M4.