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Fractional-reserve banking: Quiz


Question 1: In addition to reserve requirements, there are other required ________ that affect the amount of loans that a bank can fund.
Return on equityEV/EBITDADividendFinancial ratio

Question 2: Because of the prevalence of fractional reserve banking, the broad money supply of most countries is a multiple larger than the amount of base money created by the country's ________.
Federal Reserve SystemCentral bankOpen market operationsBank for International Settlements

Question 3: The ________ are intended to prevent banks from:
International Monetary FundCentral bankReserve requirementBasel Committee on Banking Supervision

Question 4: For an individual bank, the deposit is considered a liability whereas the loan it gives out and the reserves are considered ________.
Cash flow statementBalance sheetAssetValuation (finance)

Question 5: Member banks which fall under the umbrella of the main central bank benefit from different ________ regulation than a typical business.
DebtBond (finance)InsolvencyBankruptcy

Question 6: Due to the practice of ________ this is a rare event today, as central banks usually guarantee the deposits at commercial banks, and act as lender of last resort when there is a run on a bank.
Federal Reserve SystemCentral bankBank for International SettlementsOpen market operations

Question 7: In addition, in a normal economic environment, cash is steadily being introduced into the economy by the ________, and new funds are steadily being deposited into the commercial banks.
Central bankOpen market operationsFederal Reserve SystemBank for International Settlements

Question 8: This both limits the amount of ________ that occurs in the commercial banking system, and ensures that banks have enough ready cash to meet normal demand for withdrawals.
Federal Reserve SystemOpen market operationsCentral bankMoney creation

Question 9: An alternative to fractional reserve banking is ________.
Land value taxCentral bankFull-reserve bankingIslamic banking

Question 10: That multiple (called the money multiplier) is determined by the reserve requirement or other financial ratio requirements imposed by financial regulators, and by the ________ kept by commercial banks.
Central bankBank reservesFederal Reserve SystemExcess reserves


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