Depository institutions undertake all the following activities except _______________________.

pool risk
create liquidity
print money
minimize the cost of monitoring borrowers

A credit union is an institution that ____________________.

acts as a trustee for pension funds
acts as a trustee for estates
receives deposits from and makes loans to its members
has demand deposits that are included in M1

All of the following statements about a trust and mortgage loan company are true except _______________.

it is a privately owned institution
it acts as a trustee for pension funds
deposits at it are included in M2+
it is owned by its depositors

If a bank's total deposits increase but the loans it has made remain unchanged, then the bank's reserve ratio ______________.

decreases
remains unchanged
increases
exceeds 1

A bank's desired reserves are calculated by multiplying ________________.

the cash in its vault by the desired reserve ratio
the sum of its deposits and cash in its vault by the reserve ratio
the gold in its vault by the reserve ratio
its deposits by the desired reserve ratio

A bank can create money only if ________________.

its excess reserves equal its deposits multiplied by the reserve ratio
its excess reserves are zero
its actual reserves exceed its desired reserves
its desired reserves exceed its actual reserves

The change in deposits divided by the change in reserves is called the __________________.

reserves multiplier
monetary policy multiplier
deposit multiplier
central bank multiplier

The introduction of automatic teller machines _________________.

has increased the inflation rate
has increased banks' reserve ratios
is an example of financial innovation
has increased the amount of monetary exchange

When the dollar payment per year on a bond _________ and the bond price ___________, the interest rate on the bond _________.

remains constant; remains constant; increases
is fixed; increases; increases
is fixed; decreases; increases
decreases; decreases; decreases

When the quantity of money demanded is less than the quantity of money supplied, people __________ bonds and the interest rate _________.

sell; rises
sell; falls
buy; falls
buy; rises

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