Fractional-reserve Banking and Answer Selected Answer

Question 1
10 out of 10 points

The primary responsibility of the Federal Open Market Committee (FOMC) is to
Answer

Selected Answer: establish a level and growth of the money supply through open market operations to produce a stable economic environment.
Correct Answer: establish a level and growth of the money supply through open market operations to produce a stable economic environment.

Question 2
10 out of 10 points

Unlike the United States, many countries grant their banks the authority for
Answer

Selected Answer: full merchant banking, including investment banking and ownership of companies to which they lend.
Correct Answer: full merchant banking, including investment banking and ownership of companies to which they lend.

Question 3
0 out of 10 points

The Federal Reserve System established
Answer

Selected Answer: a system for controlling bank note issuance.
Correct Answer: a source of liquidity for the banking system.

Question 4
0 out of 10 points

Federal deposit insurance has
Answer

Selected Answer: prevented bank panic and bank failures.
Correct Answer: prevented bank depositor panics, but not bank failures.

Question 5
10 out of 10 points

The major federal regulator of mutual funds is the
Answer

Selected Answer: Securities and Exchange Commission.
Correct Answer: Securities and Exchange Commission.

Question 6
10 out of 10 points

All else equal, a decrease in reserve requirements will cause
Answer

Selected Answer: excess reserves to increase.
Correct Answer: excess reserves to increase.

Question 7
10 out of 10 points

A fractional reserve banking system might be in trouble if
Answer

Selected Answer: all deposit customers wanted to withdraw their money.
Correct Answer: all deposit customers wanted to