Question

1. Which of the following assets is the most liquid?

Dollars.

Money market mutual fund shares.

Passbook savings deposits.

Bonds.

Certificates of deposit.

2.Sumit deposits $1,500 cash into his checking account. The reserve requirement is 25%. How much money can the banking system create?

$0

$1,500

$6,000

$1,125

3. If Abigail withdraws $300 cash from her checking account, her bank's assets then:

do not change but liabilities fall by $300.

fall by $300 but liabilities do not change.

fall by $300 and liabilities rise by $300.

fall by $300 and liabilities fall by $300.

Answer 1