Test Bank Mishkin

The Economics of Money, Banking, and Financial Markets, 9e (Mishkin) – Global Edition

Chapter 10 Banking and the Management of Financial Institutions

10.1 The Bank Balance Sheet

1) Which of the following statements are true?

A) A bank's assets are its sources of funds.

B) A bank's liabilities are its uses of funds.

C) A bank's balance sheet shows that total assets equal total liabilities plus equity capital.

D) A bank's balance sheet indicates whether or not the bank is profitable.

Answer: C

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2) Which of the following statements is false?

A) A bank's assets are its uses of funds.

B) A bank issues liabilities to acquire funds.

C) The bank's assets provide the bank with income.

D) Bank capital is recorded as an asset on the bank balance sheet.

Answer: D

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3) Which of the following are reported as liabilities on a bank's balance sheet?

A) Reserves

B) Checkable deposits

C) Loans

D) Deposits with other banks

Answer: B

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4) Which of the following are reported as liabilities on a bank's balance sheet?

A) Discount loans

B) Reserves

C) U.S. Treasury securities

D) Loans

Answer: A

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5) The share of checkable deposits in total bank liabilities has

A) expanded moderately over time.

B) expanded dramatically over time.

C) shrunk over time.

D) remained virtually unchanged since 1960.

Answer: C

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6) Which of the following statements is false?

A) Checkable deposits are usually the lowest cost source of bank funds.

B) Checkable deposits are the primary source of bank funds.

C) Checkable deposits are payable on demand.

D) Checkable deposits include NOW accounts.

Answer: B

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7) In recent years the interest paid on checkable and time deposits has accounted for around ________ of total bank operating expenses, while the costs involved in...