1. If an individual bank receives $100,000 in new deposits and the required reserve ratio is 10 percent, the bank must keep the following amount of required reserves with the Fed?
$90,000.
Zero.
$10,000.
$1,000,000.
2. Assume that the Fed purchases $10 million in bonds from a bank, the monetary base will:
Increase by $10 million.
Decrease by $10 million.
Increase by $5 million.
Remain unchanged.
3. When we say that money has a function as a medium of exchange, this implies that:
Money is used to purchase goods and services rather than resorting to barter.
Money is backed by the gold standard.
Money must be in the form of a precious metal such as gold.
Money must be set at a fixed exchange rate in international currency markets.