Deposit money banks and the creation of money - Jamb Economics Past Questions and Answers

Question 6:

• JAMB 1993

The sum of N80,000 is deposited in a bank and the cash ratio of the banking system is 10%. calculate the sum of money the bank can create from the deposit?

A. N 100 000
B. N 800 000
C. N 1000 000
D. N 8000 000

Question 7:

• JAMB 1997

Banks can create more money by?

A. Increasing its cash ratio with the Central Bank
B. Issuing more banks cheques
C. Accepting more deposits from customers
D. Lending out money from customers deposits

Question 8:

• JAMB 2000

Two principal ways by which banks can lend money to their customers are through?

A. Loans and overdrafts
B. Loans and discounting bills
C. Overdrafts and cheques
D. Overdraft and treasury bills

Question 9:

• JAMB 2013

The rate of interest change on loans depends largely on

A. The prevailing exchange rate
B. Marginal efficiency of capital
C. The risk associated with the loan
D. The prevailing tax rate

Question 10:

• JAMB 2020

Fiduciary issue is that part of?

A. The issue of notes backed entirely by gold
B. A country's currency that is not negotiable
C. The issue of notes not backed by gold
D. A country's currency officially issued