Practice Commercial Banks (3.2) - Chapter 3: Money and Banking

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9 questions

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3 cards from this section. Quick, good the night before a test.
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Quiz
3 questions · about 2 min · pass mark 70%. Hints available.
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6 sample questions

Question 1.
What is a commercial bank?
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Think about where you keep your money.
Question 2.
Name one service provided by commercial banks.
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What do you do with your money at a bank?
3Question 3.
What primary function do commercial banks serve?
- Only accept deposits
- Only provide loans
- Both accept deposits and provide loans
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Think about what you do with your bank account.
4Question 4.
True or False: Commercial banks can create money through credit creation.
- True
- False
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What happens when banks lend money to customers?
Question 5.
Given a reserve requirement of 10%, compute how much money can a bank lend out if it receives a total of $500,000 in deposits.
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Calculate the reserve and subtract it from the total deposits.
Question 6.
Explain how an increase in loans issued by commercial banks could affect inflation in a growing economy.
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Consider the relationship between demand and prices in the economy.

5 more questions in this section. Enroll free to practise them all.