1Which of the following assets held by a commercial bank is typically the most profitable but the least liquid?
2
A banking system maintains a cash reserve ratio of 10%. If a customer deposits $5,000 into their account and there are no subsequent cash leakages, what is the maximum total increase in deposits across the entire banking system?
3Which items are included in the M0 (narrow money) definition of the money supply according to the provided materials?
4What is the most likely consequence of a central bank purchasing government securities in the open market as part of quantitative easing?
5In Keynesian theory, which of the following would cause a shift to the right of the Liquidity Preference (demand for money) curve?
6A country's government runs a budget deficit. Under which circumstance will this deficit NOT lead to an increase in the money supply?
7If the market rate of interest rises, what typically happens to the market price of fixed-interest government bonds (gilt-edged securities)?
8According to the Keynesian Liquidity Preference model, what are the components of 'active balances'?
9In a closed economy with a single bank and a 10% cash ratio, if customers deposit $20,000 in cash, what is the maximum amount of LOANS the bank can create?
10Which combination of policy instruments would a government use to restrain the economy (contractionary monetary policy)?
