Economics 330

Money and Banking

Answers to Handout #4

I. See book

II. 1. F

2. F

3. T

4. T

5. T

6. T

7. F

8. F

9. F

10. T

11. Uncertain: it might signify competition or it might signify significant market concentration if each bank serves a limited local area.

12. T

13. F

14. F

15. T

16. Uncertain: read the pro and con sections on this topic in your book.

17, F

18. F

19. T

20. T

21. F

22. T

23. F

24. T

25. F

26. T

27. F

28. F

29. T

30. Uncertain: Both are helpful and measure different aspects related to the degree of capitalization a bank has.

31. F

32. F

33. F

34. Uncertain: Increases in the interest rate were significant but there were other factors as well.

35. F

36. T

37. F

38. T

39. F

40. T

41. T

42. F

43. T