Test 2

Question 1

transaction deposits are _____

Answer 1

checkable deposits

Question 2

discount loans are____

Answer 2

bank loans from the federal reserve

Question 3

bank reserves include

Answer 3

1. vault cash
2. deposits at the fed

Question 4

which of banks assets is most liquid

Answer 4

reserves

Question 5

sequential service constraint means

Answer 5

“first come first serve”

Question 6

contagion effect

Answer 6

because of assymetric information, run on one bank can lead to a run on another bank

Question 7

purchase and assumption method allows

Answer 7

FDIC to garuntee deposits

Question 8

when banks borrow from other banks its a ______

Answer 8

federal funds loan

Question 9

in a bank panic, the source of contagion is the _____

Answer 9

assymetric information problem

Question 10

possible sequence in financial crisis

Answer 10

1. asset price declines
2. banking crisis
3. decline in price level

Question 11

volcker rule

Answer 11

involves the off balance sheet problem of trading risks

Question 12

deposit outflow results on equal reductions of

Answer 12

1. assets
2. liabilities

Question 13

deposits on a banks balance sheet are

Answer 13

liabilities

Question 14

bank is fully loaned up when _____

Answer 14

excess reserves = 0

Question 15

agency that monitors asset price bubbles

Answer 15

financial stability oversight council

(FSOC)